Bank Indonesia sees inflation in check, keeps interest rate at 6½%

By Richard Connell

New York, Dec. 3 - The Board of Governors of Bank Indonesia kept the BI rate at 6½% at its meeting on Thursday, according to a news release issued by the bank.

The board noted that the Indonesian economy has shown resilience in responding to the global economic crisis during 2009 and estimated that economic growth would reach 4.3% through the end of the year.

Looking forward, the board forecast that economic growth would reach 5% to 5.5% in 2010 and 6% to 6.5% in 2011 as the global economy continues to recover.

Indonesia recorded 0.03% deflation in November on a month-over-month basis, with annual inflation standing at 2.41% on a year-over-year basis, well below the inflation target of 4.5%, plus or minus 1%.

Assessing that the current monetary policy stance would promote economic recovery while allowing inflation to meet the target for 2010 of 5%, plus or minus 1%, the board opted to leave the rate at 6½%.

The board has now left the rate unchanged at four straight meetings following nine previous cuts totaling 300 basis points.

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