Small Inflation, BI Rate May Be Cut

VIVAnews - The BI Rate may still be cut due to the decrease in inflation rate. The economic growth of the first quarter of 2009 is deemed quite tolerable, making the economic activities to remain high.

"We observe that one of the factors is the falling inflation rate. But we are still evaluating the situation," said Deputy Governor of Bank Indonesia (BI) Hartadi Sarwono on Wednesday, April 15.

He explained that BI does not have any psychological level in setting the BI Rate. However, BI used to applying real interest rate having the disparity of inflation and interest rate of one to two percent. "That is in normal situation," he said.

Concerning the economic growth, BI sees that if the economic growth in the first quarter of 2009 is excellent and keeps on its track in the following quarters, then the four percent economic growth can be reached. BI figured that the 2009 economic growth would be between three and four percent while the government's prediction is at 4.3 percent and 4.8 percent.

"The economic growth of the first quarter of 2009 is predicted to reach 4.5 to 4.6 percent," he said.

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Translated by: Bonardo Maulana Wahono