SBI rate falls again

SBI rate falls again

JAKARTA : The weighted average interest rate on one-month Sertifikat Bank Indonesia notes fell Wednesday, a further signal the central bank is pushing rates lower to help cut the government's debt burden.

The one-month SBI notes stood at 17.21 percent at the weekly auction Wednesday, down from 17.37 percent at last week's auction, Bank Indonesia said.

Bank Indonesia also said it accepted Rp 30.0 trillion in bids at the auction, or 89.7 percent of total bids.

Indonesia's budget deficit was 3.7 percent of gross domestic product last year, mainly due to the huge cost of bailing out the banking system since the 1997 Asian financial crisis.

The government recapitalized banks with bonds, many of which pay interest linked to the SBI rate. A cut in rates can greatly decrease the government's interest expenses.

Still, much larger rate cuts might not be possible while inflation remains a threat and the rupiah under pressure, analyst say. --Dow Jones