BI GOVERNOR OPTIMISTIC 2009 INFLATION TARGET TO BE MET

Jakarta, Jan 16 (ANTARA) - Bank Indonesia (BI) Governor Boediono said he was optimistic BI's inflation projection of 6.5 to 7.5 percent for 2009 will be met.
"I am optimistic our projection will come true, especially because the prices of subsidized fuel oils have dropped," Boediono said here Friday.
The 2009 inflation rate was expected to drop to a single-digit figure from 11.08 percent in 2008, he said.
In the 2009 state budget, the government had assumed inflation could be lowered to 6.2 percent.
Meanwhile, economic observer Tony A Prasetyantono said the inflation rate would drop soon. Inflation would drop not only because the oil price had dropped but also because demand would also decline. "So, it is likely that prices will drop," he said.
He said the central bank's inflation target of 6.5 to 7.5 percent for 2009 was quite realistic in view of recent developments. "The target of 6.5 to 7.5 percent of inflation is safe enough," he said.
He said a decrease in inflationary pressures would give BI more freedom to cut its key rate to promote economic growth. "A cut in the BI key rate is very important to stimulate the real sector," he said.
He said until the first semester of 2009 BI may cut its key rate to eight percent from 8.75 percent at present.
"It is not impossible that the BI key rate will decline further to 7.5 percent by the end of the year but many decisive factors must work in favor of such a drop," he said.