"If the US and European economies improve and the weather is also improving while capital inflow still happens, the rate of inflation will still be around six percent," he said after dedicating a Bank Indonesia building here on Wednesday.
He said if the weather conditions in the year to come were not as extreme as now the target of six percent inflation would be reached.
"But we cannot make the assumptions on whether until December the weather would be worse or there will even be a drought," he said.
Regarding the US economy Darmin said it was already better although they would not as yet shift from its quantitative easing policy of flooding dollars across the world.
Darmin admitted the depreciation of currencies and share price index in almost all countries so far had been caused by investors` worries over inflation this year.
"The rupiah indeed is not too much pressured but the index of our capital market has indeed been quite the biggest. This is the fact that inflation had indeed happened compounded by foreign investors` perception that inflation could remain high," he said.
Darmin predicted inflation would be higher than last year driven by various factors that influenced each other so that in order to maintain the financial stability Bank Indonesia had to consider three factors namely capital inflows, inflation and BI Rate.
Asked about the possibility of the BI Rate to be raised to curb inflation Darmin said that was what the market had wanted especially foreign investors.(*)
Editor: Ruslan Burhani
Copyright © ANTARA 2011
