Finance Minister: BI Rate Cut Impossible if Inflation Still High

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  • TEMPO.CO, Jakarta - Finance Minister Bambang Brodjonegoro said that it is impossible to lower Bank Indonesia's benchmark interest rate (BI Rate) if inflation remains high. Inflation is currently at 6.79 percent while the BI Rate is set at 7.5 percent.

    Speaking at a seminar dubbed "Strategies to a Resistant National System of Finance and Banking Architecture" in Jakarta, Wednesday, May 13, the minister said Indonesia's inflation rate should no longer be a major issue.

    Bambang mentioned the Philippines, a country with similar characteristics as Indonesia. There, he said, inflation rate is low at just two to three percent per year. Their government-regulated prices are no longer an inflation factor, and the country only has core inflation and volatile food.

    Bambang also said that the recent fuel subsidy cut should not be seen as a way to provide fiscal space only, but as fundamentals achievement.

    "The ultimate objective is to leave inflation to Bank Indonesia only; which is the core inflation," he said.