Bank Indonesia Keeps 6.5% Benchmark Rate

November 4, 2009

The rate decision matched the decisions made in the prior two months and had been expected.  But comments from BI officials appeared aimed to dissuade speculation about a rate hike next year.  CPI inflation had ticked up a tenth in September, and officials had previously been warning that inflation is likely to move up to 4-6% in 2010 from 2.8% at present.  This time, instead, a focus was put on the possibility that inflation slips in the remainder of 2009.

The central bank cut rates previously by 300 basis points in total over nine straight monthly reductions from a peak of 9.5% prior to December 2008 to 6.5% at the August meeting.  Six of the reductions including those from April through August were by 25 basis points, and the remaining three moves were cuts of 50 basis points each.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.

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