A teller counts rupiah notes for a customer at a money changer in Jakarta. Indonesia’s central bank held its benchmark interest rate steady yesterday.

Reuters/Jakarta

Indonesia’s central bank held its benchmark interest rate steady yesterday as expected and said economic pressures were receding, indicating hope for room to ease policy in future.
Bank Indonesia maintained its benchmark rate at 7.50%, where it has been since February.
All analysts in a Reuters poll had predicted the hold, saying BI lacked room to cut rates to spur economic growth because inflation remains too high and the rupiah too fragile.
Also, it is widely assumed that whenever the Federal Reserve finally starts raising US interest rates, that will cause capital outflows from Indonesia and other emerging nations.
BI, which is under pressure to cut rates to boost sagging growth, said it hopes to be in a position in future, thanks to reduction in pressures.
Juda Agung, its executive director of monetary and economic policy, said “I cannot say rigidly (when), but whenever we see enough room, we can adjust (rates) immediately.”
ANZ said that it was natural for BI to offer the possibility of future policy easing “though this doesn’t appear to be a short-term signal”.
Indonesia had annual economic growth in the second quarter of 4.67%, the weakest since 2009. Announcement of third quarter growth is due next month.
After being above 7% for four months, the annual headline inflation rate fell to 6.83% in September, but that remains way above the central bank’s target range of 3-5% at the end of the year.
The volatile rupiah strengthened more than 9% last week, and on Thursday gained nearly 2%. But for the year, it has weakened about 7.5%.
September trade data issued earlier yesterday illustrated one of Indonesia’s economic problems. Imports plunged again, by 26%, showing Indonesians’ ability to consume was still limited by the weak economy and a fragile currency. Exports, which long have been falling, were down 18% from a year earlier.
Indonesian manufacturers cut payroll numbers at the second-fastest pace in at least four years in September as industry activity contracted for a 12th straight month, the latest Nikkei Markit purchasing managers’ index (PMI) survey showed.
Yesterday, President Joko Widodo’s administration announced changes in labour rules, the latest in a series of measures aimed at reviving growth in Southeast Asia’s largest economy.
From November, minimum wages will be increased every year by the GDP growth rate plus the inflation rate, chief economics minister Darmin Nasution said. Previously minimum wages were determined through yearly negotiations between unions, employers and local governments.
“This is to create as many jobs as possible and also to increase the welfare of the workers, but we also have to think about people that are not employed yet,” Nasution said.  
Indonesia yesterday unveiled new measures designed to protect workers from exploitation and provide certainty for business as Southeast Asia’s biggest economy tries to reverse a sharp slowdown.
It is the fourth time fresh stimulus policies have been revealed in just over a month, as the government seeks to shore up its weak currency and spur the economy, which is growing at its slowest pace in six years.
In the latest instalment, Chief Economics Minister Darmin Nasution announced new rules for determining minimum wage rises, something business has long blamed for denting investor confidence.
As well as sharp variations from year to year, salaries also vary wildly across the country, as wage rises are negotiated from province to province.
Nasution said the new formula would ensure wage rises continue annually but with more predictability for those employing workers.
“The state will ensure labourers don’t fall into a cheap wage trap, but businesses will get certainty,” he told reporters.
The government will also offer cheap housing and small loans to labourers, including those returning from abroad who may have lost their job and wish to open a business, he added.
The three previous batches of stimulus measures included measures to cut energy prices, slash red tape and attract foreign investment.
There has been some relief recently with the rupiah clawing back some value, after plunging about 20% against the US dollar this year.