The decision was made by considering the need to stabilize the domestic economy amidst growing concerns about the global financial system following the US sovereign debt problem and the European debt crisis.
Jakarta (ANTARA News) - Bank Indonesia (the central bank/BI) decided on Thursday to maintain its key interest rate at 6.75 percent to boost the interbank money market amidst higher excess liquidity.

The central bank also decided to expand the lower bound to the corridor of monetary operation interest rate from 100 bps to 150 bps below the key interest rate, locally known as BI rate, the chief of Bank Indonesia`s public relations bureau, Difi A Johansyah said.

The decision was made by considering the need to stabilize the domestic economy amidst growing concerns about the global financial system following the US sovereign debt problem and the European debt crisis, he said.

Although the impact of global economic uncertainties was still limited, Bank Indonesia kept monitoring the impact of global economic slowdown on the country`s economic performance, he said.

In this context, Bank Indonesia would take an interest rate response policy and a combination of monetary policy and other macro prudential policies to mitigate a potential decline in the country`s economic performance by always prioritizing the attainment of inflation rate targets of 4-6 percent for 2011 and 3.5-5.5 percent for 2012, he said.

In addition, it would also work closely with the government to anticipate the impact of the global economic slowdown, he said.

He said the Board of Bank Indonesia Governors saw that the domestic economy still showed a high degree of resistance amidst growing concerns about the prospects of the world economy.

The Indonesian economy is projected to grow 6.6 percent in the third quarter of 2011, fueled by exports, domestic consumption and investment.

Indonesia`s exports are projected to grow highly in line with the expected high global trade and commodity prices. Domestic consumption will remain strong due to an increase in government spending, while investment will increase thanks to the government`s conducive investment policy.(*)

Editor: Heru Purwanto
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