TEMPO.CO, Jakarta - The Indonesian Center of Reform on Economics (Core) projected inflation rate in 2015 will reach eight to nine percent, based on the likeliness that the Federal Reserve will tighten the US monetary policy next year.
The estimate is also based on the possibility of fuel prices being raised this year, as well as the increased tariffs of LPG and electricity, Core executive director Hendri Saparini said when attending the Indonesian Economic Outlook 2015 and Beyond: Reinventing Economic Priorities in Jakarta, Thursday, November 6.
With such a high inflation rate, Hendri predicted Bank Indonesia (BI) will raise its benchmark interest rate to up to nine percent. Currently, the BI Rate is set at 7.5 percent.
Hendri said the Fed has begun to reduce its stimulus package, but there is still no real sign of monetary tightening. "So, we can't really know when the US interest rates will be raised," he said.
To that end, Hendri asked the Jokowi-Kalla administration to prepare a response policy to anticipate that possibility.
"If Jokowi-Kalla and the Work Cabinet can take advantage of an improving external environment to maximize the domestic finances, Indonesia's economy has the potential to grow by 5.3 to 5.6 percent," said Hendri.