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Indonesia keeps interest rate unchanged at 6.0%

01-12-2012 16:35 BJT

JAKARTA, Jan. 12 (Xinhua) -- Indonesian central bank keeps its benchmark interest rate on hold at 6 percent on Thursday to maintain stability of rupiah amid concerns of higher inflation pressure, Governor of the central bank Darmin Nasution said.

Indonesia's inflation this year was forecast to raise faster at 3.5 percent to 5.5 percent, the governor told a press conference at the central bank. Despite the weakening global demand of commodity that eases imported inflation pressure, the government policy of removing fuel subsidy and soaring global oil prices may further raise the pressure.

"The rate level (6 percent) is considered in line with the target of inflation in the future, the effort to maintain the financial stability and it is still conducive in supporting the domestic economy amid the uncertainty of the global economy," he said.

The government's plan to ban private cars from consuming subsidized fuel on April 1 was expected to push up inflation by 0. 7 percent to 0.94 percent this year, Nasution said. The move aims at reducing amounting energy subsidy in this net-oil import country. The inflation reached 3.79 percent last year, the Statistic Bureau announced earlier this month.

Indonesia's rupiah had weakened by more than 7 percent against the U.S. dollar since the central bank cut its basic rate by 25 basis points in October and 50 basis points in November to 6.00 percent to spur economic growth amid the weakening global economy.

Rupiah weakened from 9,079 against one dollar on Jan.2 to 9,164 against one dollar on Jan. 12, according to the data from the central bank.


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