Low Core Inflation May Lower BI Rate

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  • TEMPO/Wisnu Agung Prasetyo

    TEMPO/Wisnu Agung Prasetyo

    TEMPO.CO, Jakarta - Deputy of Distribution and Service Statistics, Central Statistics Bureau (BPS) Sasmito Hadi Wibowo said on Monday, August 3, 2015, that year-on-year (yoy) decline of core inflation in July 2015 could be an opportunity for the Bank of Indonesia to lower its benchmark interest rate (BI Rate).

    "If you look at decline of core inflation, which is now the four percent range, this could be an opportunity for Bank Indonesia to cut their interest rates," said Sasmito in a presentation on Monday.

    He said the possibility of interest rate cuts can encourage investment that in the long-term can help boost economic growth. Core component inflation is at recorded 4.86 percent on Monday.

    Sasmito said the lower core inflation rate is not due to declining purchasing power.

    BPS recorded July inflation at 0.93 percent, or equal to the rate of inflation in July 2014. Inflation rate from January to July had reached 1.9 percent and annual inflation (yoy) at 7.26 percent.

    While core component inflation in July 2015 reached 0.34 percent, and annually (yoy) reached 4.86 percent, which means that some economic indicators are stable.