Indonesia's central bank has kept its benchmark interest rate at 7.75 percent, its lending rate at 8 percent and its deposit rate at 5.75 percent to better cope with external challenges from the U.S. Federal Reserve's interest rate hike and a slow world economic recovery, Bank Indonesia spokesman Sikkara said after the central bank governors' meeting on January 16.

Earlier, Indonesian President Joko Widodo announced that the price of gasoline will be cut from 7,600 guilders to 6,400 to 6,500 guilders (about 52 to 53 cents) per liter, which will reduce the inflation rate by 0.24%. This year there is little inflationary pressure in Indonesia, and interest rates are now set to keep inflation at 4% this year and the economy on track.

At present, Indonesia's macroeconomic indicators are relatively healthy, and the Fed's interest rate hike will not cause serious fluctuations in the Indonesian capital market, but the Bank of Indonesia will continue to pay attention to macroeconomic stability. Adhering to the tight monetary policy and macro-prudential policy, as well as the easing effect of falling international oil prices on inflationary pressure, will provide room for easing monetary policy in the second half of this year.

In addition, a rapid cut in benchmark interest rates could have a negative impact on the rupiah, which lost 1.7 per cent against the dollar last year and has lost 1.4 per cent this year.