Jakarta (ANTARA News) - Bank Indonesia (BI/the central bank) has predicted that the inflation at the end of 2011 would be recorded at four percent, or at the lower limit of BI`s previous estimate at 4 to 6 percent.

"The inflation rate this year can be four percent while that in 2012 is estimated at 4.7 percent," BI chief researcher for economic and monetary policy Perry Warjiyo said here on Tuesday.

He made the remark in a seminar on the impact of the global economic uncertainties on the Indonesian economy.

The inflation is low because of the drop in the prices of world commodities and the smooth distribution of food supply. This is reflected in the October inflation which experienced a 0.12 percent deflation where the year-on-year inflation was thus recorded at 4.46 percent.

He said that it was the low inflation rate prediction that became the basis of BI to lower its benchmark interest rate from 6.50 percent to 6.0 percent last week.

The BI rate lowering is expected to be followed by banks to also lower their landing rates.

Perry said that the real sector badly needed lower banking interest rates to increase their competitive edge as a result of the impact of the global economic slowing down.

Editor: Priyambodo RH
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