"National banks need not raise their lending rates because they still have good spread," Coordinating Minister for Economic Affairs Hatta Rajasa said.
Jakarta (ANTARA News) - The government has asked national banks not to increase their lending rates following Bank Indonesia (BI)`s decision to raise its key interest rate by a quarter percentage point to 6.75 percent early this month.

"National banks need not raise their lending rates because they still have good spread," Coordinating Minister for Economic Affairs Hatta Rajasa said here on Monday.

He said the government felt it unnecessary to assess whether or not the central bank`s decision to raise the key interest rate was on the right track as both had their respective tasks and functions.

"I think BI has its own considerations," he said.

Finance Minister Agus Martowardojo shared Hatta`s view saying he welcomed the BI`s policy.

"BI has slightly raised its key rate. Of course, it meets our expectation," he said.

BI Deputy Governor Hartadi A Sarwono said here on Monday the decision to raise the key rate was caused by a rapid change in expected inflation due to the increase in the prices of global food commodities and crude oil.

"Unless we give a signal by raising the BI Rate we fear inflationary pressure in the future cannot be controlled," he said.

The central bank had kept the key rate unchanged at 6.50 percent for the eighteenth month in a row since August 2009.

Commenting on the steady increase in global crude prices, the finance minister said the government kept monitoring the movement of crude prices and its impact on Indonesia.

"We believe the increase will be temporary because of crisis in Egypt that has had an impact on other oil producers there," he said.

He expressed hope global crude prices would return to normal when political turmoil in Egypt ended.

"Egypt`s oil production is not large. But the condition in Egypt has influenced other oil producing countries. Shortly after the political turmoil ends (global crude prices) will be stable again," he said.(*)

Editor: Heru Purwanto
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