Darmin said the hike in the BI Rate would not affect BI`s budget policy for 2011 because when it was formulated BI had already taken the rate hike into account.Jakarta (ANTARA News) - Bank Indonesia governor Darmin Nasution said the hike of the BI`s reference rate by 25 basis to 6.75 recently was predicted not to give a significant effect to lending rate and credit growth.
"The hike is necessary to curb rising expectations of inflation recently and future inflation pressure and unless the anticipatory measure was taken it would negatively affect efforts in reaching sustainable economic growth and buying power as well as public welfare on the whole," he said at a meeting with House of Representatives` Finance And Banking Commission XI here on Monday.
He said BI saw some risks unless it took the policy that could cause inflation in 2011 to surpass the target set at 4.0 to 5.0 percent, due to food price volatility and hike in the price of global commodities and the government`s plan to limit subsidized gasoline consumption.
Darmin said Indonesia`s economy in 2011 was expected to grow 6.0 to 6.5 percent driven by improving world economy and increasing domestic demand.
"The economy is projected to grow 6.4 percent in the first quarter of 2011, powered by still quite high exports in line with global economic recovery and imports which are also rising due to increasing economic activity," he said.
With the developments, current transactions in the first quarter of 2011 are expected to still record a surplus although they are declining.
Darmin said the hike in the BI Rate would not affect BI`s budget policy for 2011 because when it was formulated BI had already taken the rate hike into account.
"So, we have already calculated the February 4 rate hike with regard to its implications on the economy as a whole and BI`s budget," he said.(*)
Editor: Heru Purwanto
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