Wednesday, July 9, 2008
Bank Indonesia Governor Says Inflation Rates May Have Peaked
Source: The Jakarta Post

The governor of Bank Indonesia said Wednesday that inflation rates hovering at 11 percent may have peaked and could drop to between 6.5 percent and 7.5 percent by next year.

Consumer prices soared to a nearly two-year high in June after the government slashed fuel subsidies to avoid a budget blowout. The cost of gasoline jumped 30 percent overnight, pushing up the cost of everything from rice to electricity.

Gov. Boediono - speaking days after Bank Indonesia raised the benchmark interest rate for the third month in row - said historically inflation has risen sharply the first two months after fuel price adjustments and then returned to normal.

"I believe the peak is here," he said, adding that economic growth in the nation of 235 million was steady and had gradually accelerated. "Our focus is on guiding down inflation from around 11 percent in June to 6.5 to 7.5 percent in 2009."

Boediono said the bank would use all instruments available to calm the market in a "flexible and measured manner," managing liquidity, using reserves, and, if necessary, imposing banking regulation adjustments.