Bank Indonesia has yet to lower its benchmark interest rate

We will maintain prudent monetary and macro systems."

Jakarta (ANTARA News) - Bank Indonesia (BI) has yet to lower its benchmark interest rate (BI rate), even though the inflation rate remains relatively low.

"The condition of the global economy remains unstable, so the central bank should be careful in deciding the policy, particularly interest rate instruments," BI Governor Agus Martowardojo said here on Friday.

According to Agus, the BI also took into account the high depreciation, for if the interest rate is adjusted, it might be at risk.

On September 17, Bank Indonesia decided to maintain its key rate (BI rate) at 7.5 percent for lending, while deposits remained unchanged at 8 percent.

The decision was relevant to the effort to bring the inflation rate to a targeted range of 4, plus or minus 1 percent, for 2015 and 2016.

Martowardojo pointed out that the US Federal Reserve interest rate hike and the economic slowdown in China affected developing countries, including Indonesia.

He stated that the BI did not intend to take any risks, amid present unstable economic conditions.

"We will maintain prudent monetary and macro systems," he said.

Earlier, the Central Statistics Agency (BPS) remarked that it was possible to achieve Bank Indonesias inflation target of 4 percent, plus or minus 1 percent, for 2015, citing that inflation was 2 percent during the January-September period.

"I think it will be achieved. At the end of September, inflation rates had reached 2.24 percent. We still have three months left," BPS Deputy Chief for Distribution and Service Statistics Sasmito Hadi Wibowo said, here on Thursday.

He noted that the country still has a chance of experiencing deflation in October. However, infrastructure development may raise inflation rates, though the increase would be relatively small.

"Based on the wholesale price index (IHPB), the construction index has risen significantly. The index will continue to rise and have an impact on household goods, such as cement. This will likely make it difficult for the country to witness deflation. I think there will be inflation, albeit relatively small," he said.

The IHPB for building and construction materials rose 0.15 percent in September from one month earlier, driven by an increase in prices of water tanks at 0.97 percent, air conditioners at 0.96 percent, electrical apparatuses at 0.74 percent and sand at 0.65 percent, he said.

The IHPB for raw materials, consumer goods and capital goods in August 2015 rose by 0.87 percent, 2.89 percent and 0.58 percent, respectively, he added.

With inflation being kept in check and productivity increasing, economic growth in the third quarter will be higher than in the previous quarter, he said.
(Uu.A063/INE/KR-BSR/B003)

Editor: Priyambodo RH
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