Bank of Indonesia (BI) has lowered its economic growth outlook for this year to 4.5-5.3%, from 4.7-5.5% previously amid risks from inflation and geopolitical tensions. It, however, is maintaining low-interest rates to bolster the recovery. Inflation in Southeast Asia's largest economy was still within BI's 2-4% target range, although consumer prices rose to a two-year high in March at 2.64%. Jakarta has been keeping a lid on inflation by subsidising some fuel prices and intervening in cooking oil prices. Previous monetary tightening moves by the US had triggered capital outflows and swings in the rupiah currency. Wellian Wiranto, an economist at OCBC Bank, said that slower growth and higher inflation mark an uneasy combination for many policymakers now, including BI.
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