BI revises 1999 inflation forecast to single digit<\/p>\n
JAKARTA (JP): Bank Indonesia revised on Tuesday its 1999
\ninflation forecast to a single digit from an earlier projection
\nof 10 percent to 13 percent.<\/p>\n
The central bank said in a statement issued after its board of
\ngovernors meeting that a consequence of its tight monetary policy
\nintroduced previously would be the continued curbing of
\ninflation.<\/p>\n
It added that the availability of unused production capacity,
\na sufficient supply of basic necessities, the undisturbed
\ndistribution of goods and a stronger and stable rupiah would help
\nthe country reach the new inflation target.<\/p>\n
\"All these factors are expected to continue (to curb
\ninflation) over the next few months so that the inflation rate by
\nthe end of 1999 could reach a single digit, which is lower than
\npreviously projected,\" BI said.<\/p>\n
It said the aforementioned factors had been part of the reason
\nfor negative inflation over the past four months.<\/p>\n
Inflation in March, April, May and June respectively was 0.18
\npercent, 0.68 percent, 0.28 percent and 0.34 percent.<\/p>\n
The economy suffered hyperinflation of 77.63 percent last year
\nwhen the economic crisis was at its peak.<\/p>\n
\"Based on the positive development, the board of governors
\ndecided the course of the monetary policy in the coming months
\nwould be to continue to ease the liquidity condition carefully,\"
\nBI said.<\/p>\n
It added that a consequence of easing the liquidity condition
\ncould have a bad effect on inflation.<\/p>\n
\"With the expectations of a lower inflation rate and the
\nrelative stability in the exchange rate of the rupiah and in line
\nwith continuity in relaxing the liquidity condition, the interest
\nrate of one-month promissory notes at year-end is estimated to be
\nlower than the previous projection,\" the central bank said.<\/p>\n
Bank Indonesia deputy governor Miranda Goeltom projected on
\nMonday that the benchmark interest rate of one-month Bank
\nIndonesia promissory notes (SBI) would drop to below 15 percent
\nby the end of this year.<\/p>\n
The central bank earlier projected the benchmark rate would
\nfall to around 17 percent.<\/p>\n
Miranda also said the benchmark rate was expected to fall by
\nbetween 100 to 150 basis points to more than 17 percent at
\nWednesday's auction.<\/p>\n
The benchmark rate hovered at more than 35 percent early this
\nyear, and at 70 percent last August.<\/p>\n
She also projected that the interest rate on three-month SBI
\npromissory notes would drop to below 15 percent by year-end
\ncompared to the current level of 23.33 percent.<\/p>\n
Bank Indonesia said the improving trend of monetary conditions
\nhad started to revive the real sector.<\/p>\n
The central bank pointed out that several banks had started to
\nlend limited amounts of money, had shown positive second quarter
\ngross domestic growth and had a pick in foreign capital inflow
\nprimarily through the stock market.<\/p>\n
\"With a relative stable political condition, the board of
\ngovernors is optimistic that this development will provide
\npositive sentiment to the process of sustainable economic
\nrecovery,\" Bank Indonesia said. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-revises-1999-inflation-forecast-to-single-digit-1447893297",
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