BNI ECONOMIST PREDICTS BI TO KEEP RATE UNCHANGED

Jakarta, Nov 2 (ANTARA) - BNI economist Ryan Kiryanto predicted Bank Indonesia (BI) would keep its key rate unchanged at 6.5 percent although inflation in October was recorded at only 0.19 percent.

"I think the BI rate will move flat at 6.5 percent as the bottom level and it is hard for BI to lower it further due to expectations that inflation will rise again as a fallout from public driven economic growth," he said to ANTARA here on Monday.

He made the statement in response to October's inflation which was quite low at 0.19 percent to make the inflation rate in the calender year (from January to October) to reach only 2.48 percent.

"The decision to keep the rate unchanged will give a positive sentiment to the rupiah currency in the midst of strengthening dollar following the US's economic growth of 3.5 percent in the third quarter," he said.

He said by the end of 2009 the BI rate would remain at 6.5 percent because he predicted the rate of inflation would be at the range of 4.2 to 4.4. percent.

The central bank's board of governors will conduct a meeting to determine the key rate on November 4.

The bank in the past eight months has always cut its key rate. In January it set the rate at 8.75 percent and kept cutting it by 0.25 percent each month until August when it reached 6.5 percent.

The rate has been kept unchanged at 6.5 percent until October although the rates of inflation remained low.

BI said in October it would maintain the rate at 6.5 percent because there was a potential for inflation to rise in 2010 in line with economic recovery at home as well as in the world.***