ID :
35609
Sun, 12/14/2008 - 21:38
Auther :
Shortlink :
https://www.oananews.org//node/35609
The shortlink copeid
BI RATE SHOULD BE LOWERED TO BELOW EIGHT PCT : ECONOMIST
Jakarta, Dec 13 (ANTARA) - Economist Tony A Prasetyantono said Bank Indonesia (BI) should be able to lower its benchmark interest rate to below eight percent in 2009 to move the industrial sector.
"Assuming the inflation rate will be around seven percent in 2009, it should be possible for the BI rate to be lowered to eight percent by mid-year. If possible, there should then even be a further reduction in the rate," he told Antara Saturday.
There were good reasons for BI to start lowering its interest rate, he said.
"There are signs that the rupiah has found its new equilibrium which I think will be at Rp 10,000 - Rp 11,000 per US dollar. This is a good reason to lower the BI interest rate," he said.
Besides, 2009 was a momentum to lower the benchmark rate more aggressively since the inflation rate would also decline.
The lowering of the BI benchmark rate would not trigger a capital outflow because almost all countries in the world had decreased their interest rates.
Meanwhile, BI earlier this month lowered its reference rate to 9.25 percent but the business community said this was not enough to stimulate the real sector.
The BI rate cut in December was the first in the January-November period in 2008 after it was raised by 0.25 percent every month from May until October. The rate stood at eight percent in May and rose gradually to 9.5 percent in October until November.
The BI interest rate increases were in line with the central bank's tight money policy to control inflation.
The BI rate increases prompted banks to raise their interest rates on credits creating difficulties for business people.
"Assuming the inflation rate will be around seven percent in 2009, it should be possible for the BI rate to be lowered to eight percent by mid-year. If possible, there should then even be a further reduction in the rate," he told Antara Saturday.
There were good reasons for BI to start lowering its interest rate, he said.
"There are signs that the rupiah has found its new equilibrium which I think will be at Rp 10,000 - Rp 11,000 per US dollar. This is a good reason to lower the BI interest rate," he said.
Besides, 2009 was a momentum to lower the benchmark rate more aggressively since the inflation rate would also decline.
The lowering of the BI benchmark rate would not trigger a capital outflow because almost all countries in the world had decreased their interest rates.
Meanwhile, BI earlier this month lowered its reference rate to 9.25 percent but the business community said this was not enough to stimulate the real sector.
The BI rate cut in December was the first in the January-November period in 2008 after it was raised by 0.25 percent every month from May until October. The rate stood at eight percent in May and rose gradually to 9.5 percent in October until November.
The BI interest rate increases were in line with the central bank's tight money policy to control inflation.
The BI rate increases prompted banks to raise their interest rates on credits creating difficulties for business people.
