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