Indonesia’s Central Bank May Raise Interest Rates in
2011
Indonesia's central bank may raise its benchmark
overnight rate next year in response to possible higher
inflation, Hartadi Sarwono, a deputy governor, said on
Thursday, reiterating comments made last week.
Sarwono said on June 9 that Bank Indonesia (BI), the
central bank, may need to raise interest rates to 7 per cent
next year after keeping them on hold at a record low of 6.5
per cent this year.
Sarwono said on Thursday that year-end inflation is likely to
hit 5.5 per cent this year, still within the central bank's
target range of 4-6 per cent for this year.
A Reuters poll in April forecast the central bank would
start raising rates by 25 basis points to 6.75 per cent by the
end of the third quarter of this year.
The central bank may have to review its monetary stance
if year-end inflation comes in near 6 per cent, Sarwono
said. "The BI rate is likely to be adjusted in 2011 because
inflationary pressure is likely to pick up," Sarwono told
reporters.
Bank Indonesia cut the policy rate by a total of 3
percentage points between December 2008 and August 2009 to
shield the economy from the financial crisis.