BI MAINTAINS KEY RATE AT 6.5 PCT TO FACILITATE GROWTH

Jakarta, Sept 3 (ANTARA) - Bank Indonesia has maintained its key rate at 6.5 percent to facilitate economic growth.

"We have maintained the BI Rate at 6.5 percent for balancing and facilitating economic growth as well as maintaining inflationary stability expected to occur next year," the central bank's deputy governor Hartadi Sarwono said here on Thursday.

He said the main consideration behind the decision was a balance between stability in inflation growth and stronger domestic economic growth.

Regarding financing of economic activities, he said, BI would not focus on BI Rate signals but would monitor the development of the deal made by 14 banks to reduce deposit interest rates.

"The deal is said to have been running. We will see the deposit interest rate to decline and also the drop in the lending rate. Coupled by increasing efficiency margin will be narrowed so that credit financing will rise," he said.

Hartadi said the target of 5.5 percent economic growth in 2010 that had been discussed by the budget committee seemed to still be difficult to achieve.

"The assumption is difficult to achieve, according to the minister (finance minister Sri Mulyani), because there is still uncertainty. However with hardwork we would strive to achieve it," he said.

BI senior deputy governor Darmin Nasution also said that BI would focus on enforcing the deal with the 14 banks to reduce deposit interest rates.

"We will start coming in, monitoring and following the margin the 14 banks would take and studying it well with regard to promoting efficiency," he said.

Darmin said he hoped by maintaining the BI Rate at the present level credit interest rates could be pushed to drop further.

The BI board of governors decided at the meeting on Thusday to maintain the key rate at 6.5 percent.

They believed the decision was correct to make the domestic economy to grow stronger.

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