BI ready to meet fuel price hike

BI ready to meet fuel price hike

Agus Martowardojo. (ANTARA/Wahyu Putro A.)

If it happens BI will produce a combination of policies to respond to it."
Jakarta (ANTARA News) - The new Indonesian central bank (BI) governor, Agus Martowardojo, said the central bank had already prepared various instruments to anticipate rising inflation to be caused by fuel price hike.

"Bank Indonesia will keep monitoring the development of discussion on the draft revised budget and fuel price hike. The market certainly has predicted that there will be inflationary pressure and we are ready to respond it," he said here on Friday.

He said BI has prepared various policies to curb inflation which is predicted to rise if the subsidized fuel price is increased.

"If it happens BI will produce a combination of policies to respond to it," he said.

He said BI has a lot of instruments for it such as raising the BI Rate, foreign exchange policy and others and also could cooperate with other agencies concerned.

Agus said the response BI would take would not only be focussed on interest rate because there are a lot of other instruments that BI could take to control inflation.

BI`s deputy governor Perry Warjiyo said earlier he predicted inflation could rise 0.62 percent if the subsidized gasoline price is raised by Rp1,000 per liter and 1.24 percent if it is increased by Rp2,000 per liter.

The figures exclude indirect impact of the fuel price hike such as the increase of the price on goods and transportation.

The government has revised up its inflation assumption in the draft 2013 revised budget from 4.3 percent to 7.2 percent.

The draft revised budget is currently still being discussed at the House of Representatives.

(Reporting by Dody Ardiansyah/Uu.H-YH/A014)