OREANDA-NEWS. March 18, 2015. Indonesia's central bank, which surprised markets last month by cutting its benchmark rate, acted as expected on Tuesday and kept it unchanged on the eve of a key Federal Reserve meeting.

Bank Indonesia (BI) said the current rate of 7.50 percent is consistent with efforts to contain inflation and the current account deficit.

BI spokesman Tirta Segara said it will keep intervening in the foreign exchange market and remain "consistent to maintain the stability of the exchange rate, corresponding to fundamental conditions."

Tuesday's meeting follows a period in which the rupiah has weakened, thanks to the strong dollar and concern that Fed may soon start hiking U.S. interest rates, which could cause Indonesia to suffer capital outflows.

The BI meeting ended just hours before a two-day Fed policy meeting begins.

The rupiah, recently at its lowest level since August 1998, barely moved after Tuesday's rate hold, and was at 13,165 to the dollar. It is emerging Asia's worst-performing currency this year, shedding nearly 6 percent.

"There is still scope for a rate cut, but BI's main consideration today was the rupiah," said Eric Sugandi, Indonesia economist for Standard Chartered, the only respondent of 14 in a Reuters poll who predicted a cut on Tuesday.

ANOTHER CUT COMING?

He continues to predict a second cut ahead, "but we move the timing to May or April when inflation is low and the rupiah is more stable".

Capital Economics, which had predicted a second cut on Tuesday, said "it is unlikely to be long before BI follows up February's cut by loosening monetary policy again." It expects rate of 7.0 percent at year-end.

On Monday, Indonesia reported a trade surplus for February, but that was due to sharply lower imports as export figures were disappointing.

Capital Economics said that as long as any further falls in the rupiah are gradual, "they may actually be welcomed by BI in so far as they boost export competitiveness".

BI has inflation is likely to fall to the lower end of its target range of 3 to 5 percent, but the current account will probably stay high at 3 percent of gross domestic product (GDP) this year from 2.95 percent in 2014.

Inflation has eased, to an annual rate of 6.29 percent in February from 8.36 percent in December. Change in inflation allowed the rate cut in February to help boost growth, now at its slowest pace since 2009. The February cut erased a hike of the same size in November.