BI sees further raise in SBI<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
Bank Indonesia (BI) will continue raising its benchmark interest
\nrates to help keep the country's inflation rate -- which has been
\nmellowing out but remains under pressure from high oil prices and
\na recently weak rupiah -- on a tight leash.<\/p>\n
\"BI will still raise its interest rates, as I have repeatedly
\nmentioned before, because the recent inflationary situation is
\nstill compelling us to maintain a tight-biased monetary policy,\"
\nBI governor Burhanuddin Abdullah said on Thursday.<\/p>\n
\"Recent inflationary pressures continue to be strong, both
\nexternally from the still soaring global oil prices, and
\ninternally, in the recent weakening of the rupiah against the
\nU.S. dollar.\"<\/p>\n
Global oil prices closed flat on Thursday above US$52 a barrel
\nfollowing reports of declining U.S. crude oil inventories. The
\nlocal rupiah currency, meanwhile, slipped 0.3 percent to Rp 9,611
\nagainst the greenback.<\/p>\n
BI raised on Wednesday the interest rate of its one-month SBI
\npromissory notes from 7.98 percent to 8.02 percent. Earlier in
\nthe month, the central bank had also raised its three-month SBI
\ninterest rate from 7.81 percent to 8.05 percent.<\/p>\n
The 2005 state budget revision -- which the government and the
\nHouse of Representative's Budget Commission are nearing an
\nagreement on -- will likely set the average three-month SBI
\ninterest rate throughout the year at 8 percent. The inflation
\nrate and rupiah exchange rate, meanwhile, are estimated to be 7.5
\npercent and Rp 9,300, respectively.<\/p>\n
The Central Statistics Agency recently reported the country's
\non-year inflation rate in May stood at 7.4 percent, easing out
\nfor the second consecutive month from a high of 8.81 percent,
\nfollowing the government's decision to increase domestic fuel
\nprices. Further inflationary pressures are however expected by
\nthe end of the year, from the upcoming Idul Fitri, Christmas and
\nNew Year holidays.<\/p>\n
Burhanuddin however said the tight-biased monetary policy
\nwould not be an absolute end, but a means to support the central
\nbank's more important objective of achieving an inflation rate
\nfor the country that is more comparable with other countries' in
\nthe region.<\/p>\n
\"If the situation requires us to be tight, then we will do
\nso,\" he said. \"Otherwise, we will monitor the situation and
\nadjust it accordingly.\"<\/p>\n
Burhanuddin said the central bank would, in the near future,
\nimplement an \"inflation targeting\" scheme for the country, making
\nthe interest rate a mid-term measurement to drive the public's
\nexpectations of the medium and long-term inflation rate.<\/p>\n
\"If possible, we are eyeing an inflation rate of 3 percent
\nwithin the next three to five years,\" he said.<\/p>\n
\"This would surely be beneficially to our economy, as it would
\nenable us to be more competitive and attract more foreign
\ninvestments.\"<\/p>\n
Rising inflation would affect the public's purchasing power,
\nhurting businesses and the economy alike.<\/p>\n
Raising the central bank's benchmark interest rates to stem
\ninflation would however likely push banks to raise their interest
\nrates, making credits for business expansions more expensive, and
\ntherefore slowing down economic growth as well.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-sees-further-raise-in-sbi-1447893297",
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