BI would keep monitoring future developments in the inflation rate and adjust the rate in a measured way in time.
Jakarta (ANTARA News) - Bank Indonesia (BI) on Friday decided to maintain its reference rate at 6.75 percent and also its tight monetary policy in its efforts to keep inflation in check.

The central bank`s spokesman, Difi A Johansyah, said BI would keep monitoring future developments in the inflation rate and adjust the rate in a measured way in time.

He said it would also strive to control inflation especially imported inflation pressures caused by rising prices of international commodities and the opening of room for the rupiah exchange rate to appreciate in line with the improving global economic fundamentals.

Besides that, it would also continue to strengthen liquidity control through macro-prudential policies and monetary operations while paying attention to banks` healthy needs of liquidity including provisions on reserve requirements for loan-to-deposit ratio and reserve requirements for foreign currencies as of March 2011.

With the combination of the two policies and the government`s strong commitment to overcoming the rising food price, Bank Indonesia believed inflation could be maintained at four to six percent for 2011 and 3.5 to 5.5 percent in 2012, he said.

He said the Consumer Price Index in February 2011 reached 0.13 percent month-on-month or 6.84 year-on-year or dropped a bit although the risk of high inflation in the future remained high.

The correction in the prices of rice and chilies resulting from improving supply in line with the government`s policy has affected the inflation rate of volatile foods that underwent a deflation of 0.48 percent month-on-month.

Meanwhile, the inflation pressure of administered prices has so far been still minimal namely 0.32 percent month-on-month or 5.34 percent year-on-year.

Bank Indonesia however would keep watching closely for a possible hike of inflation in the core group that has now risen to 0.31 percent month-on-month or 4.36 percent year-on-year so far affected especially by the high inflation of volatile foods and the hike in the price of international commodities.

Indicators of inflation expectations in the financial market have shown a declining tendency although they still remain high in response to the rise in the BI reference rate while inflation expectations among producers, traders and consumers have not yet been affected much.

In view of that, Bank Indonesia would continue to take monetary and macro-prudential policies including controlling the impact of imported inflation on rupiah appreciation, he said.(*)

Editor: Heru Purwanto
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