BI raises rate for first time in six months<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Bank Indonesia (BI) raised its benchmark one-month SBI
\npromissory note interest rate on Wednesday to 8.53 percent from
\n8.51 percent a week before, reversing the declining trend since
\nthe beginning of the year.<\/p>\n
The rise in the rate is the first since the April 2 auction.<\/p>\n
The interest rate has fallen 4.46 percentage points since the
\nbeginning of the year.<\/p>\n
Bank Indonesia sold Rp 25.22 trillion worth of promissory
\nnotes, accepting 99.5 percent of the bids.<\/p>\n
Analysts said the recent decline of the rupiah against the
\nU.S. dollar and the expectation of higher prices during the
\nMuslim fasting month of Ramadhan, which starts next week, may
\nhave pushed the central bank to raise the benchmark interest
\nrate.<\/p>\n
Previously, Bank Indonesia officials had said the SBI rate was
\nexpected to continue declining for the rest of the year.<\/p>\n
The officials said that as long as the rupiah remained stable
\nand inflation stayed in check, the declining trend would
\ncontinue.<\/p>\n
The country posted modest inflation of 2.48 percent during the
\nJanuary to September period, according to the Central Statistics
\nAgency (BPS), which bodes well for the achievement of the
\ngovernment's full-year target of around 6 percent.<\/p>\n
Aside from pushing banks to cut their lending rates, the
\ndecline in the SBI rate also benefits the state budget in
\nservicing domestic debt -- all of which is in the form of
\nrecapitalization bonds, the interest on which is mostly tied to
\nthe movement of the central bank's SBI rate.<\/p>",
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"sponsor": "Okusi Associates",
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