The central bank`s board of governors made the decision after the BI Rate had been maintained at 5.75 percent for the past 16 months.
Jakarta (ANTARA News) - Bank Indonesia raised its reference rate by 25 basis point from 5.75 to 6.0 percent here on Thursday.

The central bank`s board of governors made the decision after the BI Rate had been maintained at 5.75 percent for the past 16 months.

The bank`s governor, Agus Martowardojo, said the decision was part of the combination of policies taken as a preemptive response to increasing inflation expectation and to maintain macro-economic stability and the stability of the financial system in the midst of current uncertainty in the global financial market.

He said Bank Indonesia meanwhile would continue stabilizing the rupiah exchange rate in line with the fundamental conditions and maintaining the sufficiency of liquidity in the domestic foreign currency market.

Bank Indonesia will also continue strengthening monetary operations by enriching monetary instruments and deepening intervention in the rupiah and foreign currency market.

Apart from that macro-prudential policies would also be prepared to prevent increasing excessive risks in certain sectors, he said.

Coordination with the government would also be strengthened with focus put on efforts to minimize potential inflationary pressures to maintain macro-economic and financial stability, he added.

Agus said BI had also decided to maintain the deposit facility rate and the lending rate at respectively 4.25 percent and 6.75 percent.

The rupiah exchange rate against the US dollar has dropped 0.74 percent month-to-month to Rp9,795 or at an average 0.36 month-to-month to Rp9,758.

The rupiah exchange rate has been pressured especially because of repositioning of financial assets in the emerging markets in connection with the possibility of monetary stimulus adjustment by the Fed and sentiment over domestic fiscal and current account deficits.

Currencies in the Asia regions have also suffered depreciation. Bank Indonesia would continue stabilizing the rupiah exchange rate in line with fundamental conditions and maintain the sufficiency of liquidity in the foreign currency market.(*)

Editor: Heru Purwanto
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