BI to Maintain BI Rate
Wednesday, 06 February, 2008 | 16:55 WIB

TEMPO Interactive, Jakarta: It is expected that Bank Indonesia (BI) will maintain the standard interest rate or the BI Rate at a level of eight percent.

The consideration is based on January’s inflation being quite high at 1.88 percent and annual inflation at 7.36 percent.

Ryan Kiryanto, a senior economist from PT Bank Negara Indonesia, said that high inflation meant that the United States’ central bank interest rate, which was actually quite low at three percent, was not as influential as BI focuses on maintaining low inflation.

“It is expected that inflation will also remain high up until March, between 0.8 and 1.2 percent, so there is a possibility BI will maintain the BI Rate,” he said in Jakarta yesterday (5/2).

If the inflation expectation is high or above 6.5 percent, the decision to maintain the BI Rate is appropriate.

Because investors would probably speculate on the money market if the BI Rate is lowered.

“This would have the potential to disrupt the Rupiah,” said Kiryanto.

Eko Nopiansyah