BI says inflation target still attainable

BI says inflation target still attainable

The Jakarta Post, Jakarta

Bank Indonesia (BI) expressed optimism on Friday that inflation
this year would still be within the 9 percent to 10 percent
target level despite the fuel price hike policy.

Bank Indonesia Governor Sjahril Sabirin was also convinced
that the government had carefully calculated the impact of its
fuel hike policy on prices.

"It (the fuel price increase) will certainly have a temporary
effect, but not in the long term. So inflation will still be
okay," Sjahril told reporters on Friday.

He was speaking during an inauguration ceremony of three new
deputy governors of the central bank, namely Maulana Ibrahim,
Maman Soemantri and Bun Bunan Hutapea. With the three on board,
BI now has six deputy governors. The other three are Miranda
Goeltom, Achjar Ilyas and Aulia Pohan.

The government raised fuel prices by an average of 22 percent
Thursday, and starting March the price would be set monthly based
on market prices in neighboring Singapore.

The fuel price hike was unavoidable to help ease the burden of
the state budget.

Some economists earlier predicted that the new fuel hike
policy could trigger steep increases in the prices of goods,
sending inflation to a double digit level of between 12 percent
and 13 percent.

Last year, the economy suffered a double-digit inflation of
12.5 percent, forcing Bank Indonesia to impose a high interest
rate policy, which caused difficulties for the business sector
hungry for bank loans and seeking debt restructuring deals.

Bank Indonesia has started to gradually lower its benchmark
interest rate since the beginning of the month.

Separately, Minister of Trade and Industry Rini Soewandi also
played down the inflationary threat fears, saying that the fuel
price hike would only increase prices of goods by 4 percent to 5
percent.

Commenting on reports from consumers at marketplaces across
the country, that the increase in commodity prices has gone up by
more than five percent, she simply replied, "Our laws cannot
impose sanctions on people who decide to raise their prices."

Bank Indonesia deputy governor Miranda Goeltom said that the
current increase in prices was largely caused by the delay in the
announcement of the fuel price hike.

The delay prompted some people to hoard fuel products and
other goods, particularly rice.

The government was supposed to announce the fuel price hike
earlier this month.

"If, in the future, we can prevent this kind of uncertainty
again, I am convinced we will be able to control inflation," she
said.