BANKS NEED TRANSITIONAL PERIOD TO LOWER INTEREST RATES

Jakarta, Jan 14 (ANTARA) - Private banks need a transitional period before they are able to lower their credit interest rates following the recent 0.5 percent cut in the Bank Indonesia (BI)'s benchmark rate, a banker said.

"Banks will surely lower their interest rates but they need a transitional period. I think, bank interest rates will be lowered in the first quarter of 2008," president director of CIMB Niaga Bank, Arwin Rasyid, said here on Wednesday.

He said banks needed the transitional period because they could not lower their interest on deposits all at once as they had to wait for the deposits to mature.

Rasyid said banks would adjust their interest rates to the BI benchmark rate after they had reset their interest on deposits in accordance with the cost of money.

In the meantime, Retail Director of CIMB Niaga Bank, James D Rompas said his bank was still considering by how much its interest rate should be lowered, including its interest rate on house ownership credits.

"We are still assessing the impact of the BI interest rate cut on on our credit pricing," he said.