*
Benchmark rate left at 7.50 pct, its level since Feb
* C.bank
has faced political pressure to lower rates
* Loan
policies will be changed to spur lending - c.bank
JAKARTA,
May 19 (Reuters) - Indonesia's central
bank held its key policy rate unchanged on Tuesday, as expected, shrugging off
political pressure for a cut to help lift economic growth that has slumped to
its slowest pace since 2009.
Instead
of cutting rates - which it is loath to do as it battles inflation and wants to
help the rupiah - Bank Indonesia (BI) said it will ease some restrictions to
encourage banks to boost loans.
"To
nurture the growth momentum, BI will loosen the reserve requirement policy for
loan-to-deposit ratio, loan-to-value for mortgages and downpayment for car and
motorcycle loans," it said.
No
details were given, but BI has hinted since last year that it will relax some
rules. Governor Agus Martowardojo said amended regulations should be issued by
early June.
"It's
hard to move, from the monetary side, but we have macroprudential (measures),
we ease up on the brakes... BI still has room to manoeuvre", said Deputy
Governor Perry Warjiyo.
Tuesday's
policy meeting came two weeks after the government reported an annual growth
rate of 4.71 percent in the first quarter, the lowest since the global
financial crisis.
Before
and after the growth announcement, Vice President Jusuf Kalla called for BI to
lower interest rates.
A BALANCING ACT
Aldian
Taloputra, economist with Mandiri Sekuritas, said BI is "trying to balance
managing the risks in currency while supporting growth. That's why the central
bank chose to loosen its macroprudential policies instead of cutting
rates."
The
benchmark rate has been 7.50 percent since February, when it was cut 25 basis
points.
On
Tuesday, the central bank also held its overnight deposit and lending facility
rates at 5.5 percent and 8.0 percent.
BI
targets year-on-year loan growth at 15-17 percent for this year. In March,
loans grew 11.3 percent from a year ago, down from the previous month's 12.2
percent pace.
Annual
headline inflation in April rose to 6.79 percent from March's 6.38 percent.
Martowardojo has said annual inflation should be 4.2 percent at year-end, still
within BI's target range of 3-5 percent.
Traditionally,
the pace of price-rises increases during the Islamic fasting month of Ramadan,
which this year begins in mid-June.
The
rupiah rose as much as 0.2 to 13,100 per dollar, compared to Monday's close of
13,132. Before the central bank decision, the rupiah stood at 13,180. The
rupiah has lost 5.6 percent against the dollar this year, making it the
worst-performing Asian currency.
By Hidayat
Setiaji and Gayatri Suroyo
(Additional
reporting by Nilufar Rizki, Fransiska Nangoy and Randy Fabi and Jongwoo Cheon
in Singapore; Editing by Richard Borsuk)
Business & Investment Opportunities
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