Indonesia Keeps Rate Steady

Indonesia’s central bank Thursday left its benchmark overnight interest rate steady at 6.50 percent despite a sharper than expected rise in inflation in January. Bank Indonesia (BI) said inflation was on target to meet annual forecasts of four to six percent and rates would be held in check to ease liquidity and encourage economic activity.

“The decision was taken after considering that the current BI rate was still consistent with the 2010 inflation target of about five percent,” BI said on its website.

Inflation stood at 3.72 percent in January compared to 2.78 percent in December, but the surge in price growth was temporary and driven by prices of food, especially rice, the bank said. It added that the rice harvest should begin within the next few months and that would increase supply.