SBI INTEREST RATE'S LOWERING TO 6 PCT POSSIBLE

Jakarta, Feb 6 (ANTARA) - Bank Indonesia (BI) Senior Deputy Governor Miranda S Goeltom said the interest rate on three-month BI certificates (SBI) could be lowered to 6 percent at the end of this year if its annual average rate was set at 7.5 percent.

"We hope inflation will continue drop until the end of the year so that the average interest rate on three-month SBIs of 7.5 percent will go down from the present 8.75 percent to 6 percent," Miranda told a hearing with the House of Representatives (DPR)'s Commission XI, which deals with financial affairs, Thursday.
She cited as an example Brazil's central bank which was aggressive in cutting its interest rate to two percent. The inflation rate in Brazil was high reaching 13 percent.
"In Indonesia, we want our policy to generate the real sector while maintaining the stability of the financial sector," she said.
The senior deputy governor of BI said that BI benchmark rate could meanwhile be lowered to six percent if the inflation rate was below five percent.
BI has lowered its benchmark rate, locally known as BI Rate, from 8.75 percent to 8.25 percent.
Legislator Melchias Markus Mekeng said he was not satisfied with BI which had no courage to aggressively cut further its rate. He said BI rate could be cut further from the present 8.25 percent.
"This means that BI cannot help much in boosting the development of the real sector," he said.
Bank Indonesia (BI/the central bank) lowered its benchmark rate by 50 basis points from 8.75 percent to 8.25 percent on Wednesday in an effort to boost a better growth of national economy.
Last month, BI cut its benchmark rate by 50 basis points from 9.25 percent to 8.75 percent. At that moment, BI saw a good inflation development.
During the working meeting with the House, the interest rate of three-month SBI was finally decided at a range of 6.5 - 7.5 percent.***