Indonesia will face increased liquidity in the future, along with an increase in capital inflows that, in turn, causes more liquidity. The impact of such situations is that the interest rate of the Inter-Bank Money Market tends to descend.
Jakarta (ANTARA) - The Deputy Governor of Bank Indonesia (BI), Hartadi A Sarwono, has said BI still might again decrease the BI Rate after the recent decrease of 25 base points from 6 percent to 5.75 percent.

Sarwono said here on Friday that Indonesia will face increased liquidity in the future, along with an increase in capital inflows that, in turn, causes more liquidity. The impact of such situations is that the interest rate of the Inter-Bank Money Market tends to descend.

"If those situations occur in the future, there will be a possibility to decrease the BI Rate because of the abundant liquidity," he said.

On the other hand, Governor of Indonesian Bank Darmin Nasution said it was still possible BI might decrease the rate because the inflation level in Indonesia is still positive, though in other countries interest rates remain below the inflation rate.

"In the monetary field, our real interest rate is still positive, while our neighboring countries are negative.

Nasution further said Indonesia has many factors that other countries do not, including the legal fiscal deficit that can be increased to offer incentives and economic supports. Also, the Gross Domestic Product (GDP) of Indonesia, in relation to the credit ratio, still might be increased.

"Those factors are used by Bank Indonesia to remain safe during Europe�s economic crisis and keep economic growth both fiscally and monetarily secure," he said.

According to Nasution, the decrease of the BI Rate on Thursday, Feb 9, was based upon the inflation calculation of what the economy can handle and based upon year on year inflation rates in which, after two months, the amount will be steady or decrease.

"While regarding oil fuel regulations, we still do not know what kind of scenario to anticipate, so we do not have to wait for the next inflation level," said Nasution.

Further, he said the inflation level in Indonesia is still in the normal range, although the price of oil fuels are related to inflation, though BI predicts the increase will not be too high.(*)

Editor: Heru Purwanto
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