Monday, May 5, 2008
Chamber Asks BI not to Raise Key Rate
Source: Antara News

Jakarta (ANTARA News) - The Indonesian Chamber of Commerce and Industry (Kadin) has expressed hope Bank Indonesia (the central bank/BI) will not raise its key rate this month although the on-month inflation rate in April was 0.57 percent and the on-year inflation rate 8.96 percent.

"Businessmen hope BI will not raise the BI Rate because until now they still believe the central bank will not do so despite the high monthly inflation rate in April 2008," the chief of the chamber`s permanent committee for monetary and fiscal affairs, Bambang Soesatyo, said here on Monday.

Even without a hike in the BI Rate, the business world was already suffering due to a 6.4-11.3 percent increase in the prices of fuel oil for industries effective May 1, an increase in electricity bills, global inflation pressures, declining demand in the export market, high taxes and consumers` low purchasing power, he said.

In addition, non-performing loans had also jumped by 25 percent from 5 percent to 6.25 percent of total outstanding loans while the stability index of the financial system had risen to 1.25 percent from 1.21 percent previously, he said.

"If the funancial system`s stability index approaches the 2-percent level, it is a red signal because it means the economy is in turbulence," he said.