Indonesia’s Central Bank May Raise Interest Rates in 2011
Indonesia's central bank may raise its benchmark overnight rate next year in response to possible higher inflation, Hartadi Sarwono, a deputy governor, said on Thursday, reiterating comments made last week.
Sarwono said on June 9 that Bank Indonesia (BI), the central bank, may need to raise interest rates to 7 per cent next year after keeping them on hold at a record low of 6.5 per cent this year.
Sarwono said on Thursday that year-end inflation is likely to hit 5.5 per cent this year, still within the central bank's target range of 4-6 per cent for this year.
A Reuters poll in April forecast the central bank would start raising rates by 25 basis points to 6.75 per cent by the end of the third quarter of this year.
The central bank may have to review its monetary stance if year-end inflation comes in near 6 per cent, Sarwono said. "The BI rate is likely to be adjusted in 2011 because inflationary pressure is likely to pick up," Sarwono told reporters.
Bank Indonesia cut the policy rate by a total of 3 percentage points between December 2008 and August 2009 to shield the economy from the financial crisis.