BI TO ASK BANKS TO LOWER INTEREST RATES

Jakarta, March 5 (ANTARA) - Bank Indonesia (BI/central bank) Governor Boediono said he would communicate with banks to persuade them to lower their interest rates following Wednesday's cut in BI's benchmark rate by 0.5 basis points to 7.75 percent.

"We must explain things to the banks but it will of course take time for them to lower their interest rates," Boediono said here on Wednesday.
He made the statement in reply to a reporter's question whether the BI's decision to cut its benchmark rate (known locally as BI Rate) would lead banks to also lower their interest rates.
He said BI and banks always communicated with each other. "We always communicate with banks. We tell them our concerns. We always have two-way communications in various forums," he said.
The board of governors of Bank Indonesia (BI) decided on Wednesday to cut the central bank's benchmark rate by 50 basis points from 8.25 percent to 7.75 percent, the BI said in a press statement released here on Wednesday.
"The decision was taken after BI conducted an over all evaluation on developments in the economic and financial fields at home and abroad, particularly with regard to the protracted global economic crisis," the BI said in its press release.
It said that global economic developments still showed a deeper slump as reflected in developed countries' economic drop which was deeper then previously expected.
The BI said that the global financial market was also still weak in line with increasing reports of losses by world financial institutions.
According to BI, the slowing down of the world economies would affect Indonesia's exports which would eventually affect Indonesia's economy as a whole.
Th worsening of the global financial conditions would create negative sentiment towards countries in emerging markets with the potential of creating pressure on the economies of a number of countries, including Indonesia.***