BI's rate up for fear of inflation

BI's rate up for fear of inflation

Bank Indonesia's one-month promissory notes stood at 16.92 percent at Wednesday's weekly auction, or a slight increase on last week's rate of 16.91 percent, Bank Indonesia said.

The slight increase marked the end of the recent declining trend of the rates, and showed that the central bank could not afford to cut the rates further amid inflationary pressure.

In recent weeks, BI had been cutting rates so as to help ignite the real sector, but massive flooding in Greater Jakarta is widely feared to pressurize inflation as the floods will eventually disrupt food distribution, thus sending food prices skyrocketing.

The Central Statistics Bureau (BPS) has predicted a high rate of inflation in February due to the floods, putting at risk the government's inflation target of 9 percent.

In January, the country has already posted 1.99 percent inflation.

BI also said it accepted Rp 26.00 trillion in bids at the auction, or 94.1 percent of total bids. --JP