The hike has not as yet calmed down bank depositors as depositors expect inflation to rise above 7.0 percent.Jakarta (ANTARA News) - An economic observer said recent BI Rate`s hike by 50 basis points from 6.0 to 6.5 percent was not high enough to calm down depositors because inflation is expected to be higher than that.
"The hike has not as yet calmed down bank depositors as depositors expect inflation to rise above 7.0 percent," Toni A Prasentiatono from state University of Gajahmada in Yogyakarta said here on Tuesday.
Toni suggested that the central bank would decide to raise the reference rate again in the board of governors` meeting next month.
"For the time being BI may intervene carefully," he added.
Toni said the government must start to understand about the need for a new equilibrium for the rupiah exchange rate namely above Rp10,000 per US dollar.
"This is actually still tolerable because during the sub-prime mortgage crisis in 2008-2009 the rupiah exchange rate reached Rp12,000 against the dollar," he said.
He said the new equilibrium must immediately be made known to the public with regard to curbing its psychological impact or negative sentiment towards the currency.
While raising its reference rate Bank Indonesia has also increased its deposit facility rate by 50 basis points from 4.25 to 4.75 percent and the rate of fixed lending facility to 6.75 percent.
The policy was taken to assure that the inflation hike following fuel price hike could immediately return to its target range.(*)
Editor: Heru Purwanto
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