ID :
39601
Thu, 01/08/2009 - 21:50
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Shortlink :
https://www.oananews.org//node/39601
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GOVT HOPES BI RATE CUT WILL STIMULATE INVESTMENT
Jakarta, Jan 8 (ANTARA) - The government hopes that the lowering of Bank Indonesia's (BI/the central bank) benchmark rate on Wednesday will serve as a stimulus to investment and economic growth, Finance Minister Sri Mulyani Indrawati said.
"I think yesterday's BI rate cut wlll help us bring down further the inflation rate this year so that there will be room for banks to lower their interest rates to stimulate investment," the minister said here on Thursday.
The minister made the remarks in response to a question to what level the central bank should lower its benchmark, locally known as BI Rate, to support economic growth as expected by the government.
"Economic growth must be supported by several factors. The BI Rate is only one of them," she said.
She said what needed to borne in mind was the fact that banks now were also in a process of consolidation in the face of the impact of the global economic crisis.
The minister said that a credit growth of 20 to 25 percent in 2009 would stimulate economic growth to about 4.5 percent to 5.5 percent.
"With an interest rate of 9 percent in 2008, credit growth could reach 37 percent," she added.
She said however that credit growth was not decided by interest rates only but also other factors.
"So, if interest rates go down while liquidity is limited or there are observed economic risks in the future, usually banks also are cautious about providing credits," the minister added.
On Wednesday, BI cut its benchmark interest rate by 50 basis points to 8.75 percent. BI Governor Boediono told a press conference that the central bank took the decision after it evaluated the current economic and monetary conditions at home and overseas.
"The risk considerations in 2009 require us to take monetary polices which support economic growth while keeping inflation and stability for the financial sector for the middle term," he said.
"I think yesterday's BI rate cut wlll help us bring down further the inflation rate this year so that there will be room for banks to lower their interest rates to stimulate investment," the minister said here on Thursday.
The minister made the remarks in response to a question to what level the central bank should lower its benchmark, locally known as BI Rate, to support economic growth as expected by the government.
"Economic growth must be supported by several factors. The BI Rate is only one of them," she said.
She said what needed to borne in mind was the fact that banks now were also in a process of consolidation in the face of the impact of the global economic crisis.
The minister said that a credit growth of 20 to 25 percent in 2009 would stimulate economic growth to about 4.5 percent to 5.5 percent.
"With an interest rate of 9 percent in 2008, credit growth could reach 37 percent," she added.
She said however that credit growth was not decided by interest rates only but also other factors.
"So, if interest rates go down while liquidity is limited or there are observed economic risks in the future, usually banks also are cautious about providing credits," the minister added.
On Wednesday, BI cut its benchmark interest rate by 50 basis points to 8.75 percent. BI Governor Boediono told a press conference that the central bank took the decision after it evaluated the current economic and monetary conditions at home and overseas.
"The risk considerations in 2009 require us to take monetary polices which support economic growth while keeping inflation and stability for the financial sector for the middle term," he said.
