SBI rate drop to 16.93%

SBI rate drop to 16.93%

The weighted average interest rate on one-month Bank Indonesia SBI promissory notes is continuing to fall, descending for the first time in seven months below the 17 percent mark.

Bank Indonesia said its SBI rate fell to 16.93 percent from 17.09 percent during Wednesday's weekly auction.

The auction absorbed Rp 23.75 trillion (about US$2.3 billion) from the money market, the central bank said.

Bank Indonesia has been scaling back its interest rates since early this month, in spite of continued inflationary pressure coming from recent price hikes in fuel and power charges.

The central bank must lower interest rates to bring them down to the targeted 14 percent average for the whole of this year.

A large portion of state bond coupon rates are tied to interest rates, so that if the central bank misses the target it would add to the pressures on the state budget. -- JP