After only two years on the scene, UangTeman, Indonesia's first online lending service, has become a lucrative business. (Antara Photo/Muhammad Adimaja)

Indonesia C.Bank's Room for Benchmark Rate Cut Limited: Official

BY :HIDAYAT SETIAJI

JANUARY 31, 2017

Jakarta. The Indonesia central bank's room for monetary easing has become limited due to rising inflationary pressure, a senior central bank official told an economic forum on Tuesday (31/01).

"There are inflationary pressures coming from adjustment in electricity tariffs and from the global condition, so the room for BI [Bank Indonesia] to lower the benchmark rate has become limited," Juda Agung, executive director of economic and monetary policy, said.

In December, the annual inflation rate was 3.02 percent. A Reuters poll projected the January level, to be announced on Wednesday, at 3.11 percent.

Agung said BI will continue to make sure banks have enough liquidity so they don't have to raise their rates, including for lending.

BI last year cut its benchmark interest rate six times, by 150 basis points, to 4.75 percent, taking advantage of low inflation rates, a comfortable current account deficit and a largely stable rupiah.

Reuters

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