Jakarta (ANTARA News) - Bank Indonesia (BI) on Thursday decided to raise its benchmark interest rate by 25 basis points to 8.75 percent.
The central bank took the decision after considering the impact of the current situation on the domestic economic stability and financial system, and the prospects for the national economy this year and next year, BI Governor Boediono said in a press conference here on Thursday.
"Inflationary pressure in 2008 was particularly the result of fuel oil and food price hikes," he said.
BI also noted that the inflationary pressure also resulted from rising demands due to a rise in the amount of bank loans and money supplies until the second quarter of this year.
Therefore, BI considered it necessary to raise its key rate to prevent the second round effect of fuel oil and food price hikes on the prices of other commodities, he said.
He said BI would always use the available instruments in a flexible and measurable way to lower the inflation rate in 2009 to 6.5-7.5 percent. For its part, BI would coordinate with the government intensively.
On-year inflation rate reached 11.03 percent in June 2008 while the January-June 2008 inflation rate climbed to 7.37 percent compared to 2.08 in the same period last year.
The central bank predicted full-year inflation rate would soar to 11.5-12.5 percent.(*)
The central bank took the decision after considering the impact of the current situation on the domestic economic stability and financial system, and the prospects for the national economy this year and next year, BI Governor Boediono said in a press conference here on Thursday.
"Inflationary pressure in 2008 was particularly the result of fuel oil and food price hikes," he said.
BI also noted that the inflationary pressure also resulted from rising demands due to a rise in the amount of bank loans and money supplies until the second quarter of this year.
Therefore, BI considered it necessary to raise its key rate to prevent the second round effect of fuel oil and food price hikes on the prices of other commodities, he said.
He said BI would always use the available instruments in a flexible and measurable way to lower the inflation rate in 2009 to 6.5-7.5 percent. For its part, BI would coordinate with the government intensively.
On-year inflation rate reached 11.03 percent in June 2008 while the January-June 2008 inflation rate climbed to 7.37 percent compared to 2.08 in the same period last year.
The central bank predicted full-year inflation rate would soar to 11.5-12.5 percent.(*)
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