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Friday July 4, 4:22 PMRise in Indonesia's Key Rate Is Optimum Choice: Economist$all $id $bnk $ecoJAKARTA, July 3 Asia Pulse - Bank Indonesia's decision to raise its key rate by 25 basis points to 8.75 per cent on Thursday is an optimum choice although the central bank can actually keep it at 8 per cent as an option, an economist said. "Overall, I think the decision to raise the BI Rate by 25 basis points is an optimum choice," A. Tony Prasetiantono, chief economist of state-owned Bank Negara Indonesia (BNI), said on Thursday. In view of the current situation, other countries, including European nations would do the same, he said. Only the US Federal Reserve kept its interest rate at 2 per cent, he said. "This is because the Fed had aggressively lowered its interest rate earlier than other countries did." The rise in the BI Rate would have a positive impact on the rupiah's exchange rate to strengthen at Rp9,200 per dollar. In addition, it would also help ease inflationary pressure, he said. But he doubted the effectiveness of the policy to deal with the inflationary pressure because the key rate only rose by 25 basis points. "And the current inflation is chiefly caused by food price hikes," he said. He said the rise in the benchmark rate would also lead to a number of negative impacts because it would do little to help banks channel more loans. (ANTARA) |
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