Banking observer Aviliani said here on Monday that it was reasonable for small banks to raise their lending rates in order to maintain their business operations.
They generally ran short of liquidity because demand for credits was high, he said.
"So, banks which raised lending rates were small banks only while major banks did not increase their interest rates," Aviliani said.
She said that the decision of Bank Indonesia (BI/the central bank) not to increase its key rate should have been followed by banks by not raising their interest rates.
"Banks have positively responded to the BI decision so that they had not reason to increase their lending rates, except they are facing liquidity problems," he said.
Economic analyst Ryan Kiryanto said the BI decision not to raise its benchmark rate and maintained it at 6.75 percent indicated the central bank`s determination to maintain increasing economic performance, coupled with a condition where stability was under control amid high access to domestic liquidity and the inflows of foreign funds.
He said that the BI decision indicated its intention to fend off capital inflows so that they would not be too swift because they could threaten the macro-economic conditions when a sudden reversal took place.
However, he said, there is the possibility of BI to raise its key rate to 7 percent in the third or fourth quarter because the year-on-year inflation could increase during that period.
(Uu.A014H-NG)
Editor: Priyambodo RH
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