Central Bank Cuts Rate by 0.5 Percent

VIVAnews - The Board of Governors of Indonesian central bank, Bank Indonesia (BI), today decided to cut the BI Rate by 50 basis points to 8.25 percent.

Latest indicators showed that the global economy is in fact worse than the estimation brought forth some months ago. It has affected the domestic economy even more, mainly on the sectors related to foreign trading. Meanwhile, non-tradeable sector has more stable development.

The growth in banking credit and monetary elements indicated a delay compared to the high growth rate in the second semester of 2008. Inflation rate is decreasing. In the last two months (December 2008 and January 2009), consumer price index has decreased.

Meanwhile, Indonesian foreign exchange reserves by late January 2009 were recorded at US$50.9 billion or equals to 5.2 months of imports and government's foreign debts repayment.

The national banking condition displays stability, as reflected from the development of banking credit adequacy ratio (CAR) and non-performing loans (NPL), which is still viewed as being sound. Meanwhile, banking liquidity, including liquidity flow in interbank financial market, is improving compared to the past few months.

Bank Indonesia will take immediate measures to strengthen Indonesian banking, including the required liquidity management as well as the improvement in bank mechanism and monitoring system.

Translated by: Bonardo Maulana Wahono