Interest rate may remain steady by year end: Indonesian central bank

19:22, November 16, 2009      

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The benchmark interest rate would keep steady at 6.5 percent by year end, as the inflation performance is not strong enough to push the central bank to raise the rate, a deputy governor of the Indonesian central bank said here Monday.

"Actually, we do not want to rise the rate harshly. Because we do not want later to rise again the rate after we cut it," Deputy Governor Darmin Nasution told lawmakers at a hearing in the parliament.

On Nov. 4, the Indonesian central bank refrained from reducing rate for a third straight months and kept it on hold at 6.5 percent. The bank had slashed its borrowing cost for a ninth straight month, starting from December 2008, with 300 basis point cut. As an effort to protect the country from the fallout of the global financial routs.

Indonesia's annual inflation rate in October slowed to 2.57 percent.

Indonesia's economy grew 4 percent in the second quarter of this year. The central bank estimates that for the whole year, the gross domestic product to grow between 4 to 4.5 percent.

The bank forecasted that the inflation would be below target of 4.5 + 1 percent this year and 5 + 1 percent for the next year.

Deputy governor of the bank Hartadi Sarnowo said on Oct. 22 that the bank had limited rooms to reduce rate, signaling that the rate may rise for the next time.

Source: Xinhua
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