BI benchmark rate down to 8.46%<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The central bank's benchmark interest rate declined on Wednesday
\nto 8.46 percent during the weekly auction of one-month Bank
\nIndonesia SBI promissory notes.<\/p>\n
The rate was 8.48 percent a week ago.<\/p>\n
Bank Indonesia has been cutting the benchmark rate during the
\npast year amid a benign inflation environment, thanks mainly to a
\nrelatively stronger exchange rate of the rupiah against the U.S.
\ndollar. The one-month SBI rate was greater than 13 percent at the
\nbeginning of this year.<\/p>\n
On Monday, the Central Statistics Agency (BPS) announced that
\ninflation in October rose only slightly by 0.55 percent from the
\nrate in September, bringing total inflation during the first 10
\nmonths to a modest 3.05 percent.<\/p>\n
The reduction in benchmark rate is expected to push banks to
\nalso lower their lending rates so that the corporate sector can
\nobtain cheaper loans to expand its business activities, which in
\nturn would contribute to economic growth.<\/p>\n
The move is also expected to help ease the burden on the
\ngovernment in servicing its huge domestic debt as a result of the
\ncostly bank bailout program launched in the wake of the late
\n1990s financial crisis.<\/p>\n
On Wednesday, the interest rate on three-month SBI notes
\ndeclined to 8.38 percent from 8.43 percent. The interest rate on
\ngovernment bonds used to finance the bank bailout program is
\nlinked to this SBI rate.<\/p>\n
Some analysts, however, have said that Bank Indonesia may have
\nto put a brake on the declining SBI rate in the coming months
\namid rising inflationary pressure, as prices are likely to rise
\nduring Ramadhan and the run-up to the Christmas and New Year
\nfestivities.<\/p>\n
Elsewhere, Bank Indonesia also announced that the country's
\nforeign exchange reserves in the fourth week of October declined
\nby US$267 million to $34.74 billion from the previous week's
\nlevel.<\/p>\n
The central bank said that the decline was due to repayment of
\nforeign loans.<\/p>",
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