Indonesia struggles with inflation

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Indonesian-rupiahIndonesia’s central bank raised its benchmark interest rate double than economists forecast by 50 basis points to 6.5 per cent, the bank announced in a release on July 11.

“The policy was adopted to ensure that inflation will return to its target path after the fuel price hike. In addition, Bank Indonesia will also strengthen its policy mix,” the release said.

These measures include “providing adequate liquidity in the foreign exchange market,  enhanced loan-to-value regulation in the property sector and minimising inflationary pressure to maintain macroeconomic stability as well as financial system stability.”

Indonesia in June became ASEAN’s first major economy to boost rates in 2013, facing one pf Asia’s worst performing currencies.

Inflation is expected to peak in July after the fuel price rise of June and the beginning of the fasting month of Ramadan in the world’s most populous Muslim nation. Higher housing costs are also contributing to inflation.

The Indonesian economy grew 6.02 per cent in the first three months of 2013 from a year ago, after expanding 6.11 per cent from the last quarter of 2012. The central bank has lowered its economic growth forecast for 2013 to between 5.8 to 6.2 percent from a previous estimate of as much as 6.6 per cent.

1 US dollar stood at 9,970 Indonesia rupiah on July 11.

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Indonesia's central bank raised its benchmark interest rate double than economists forecast by 50 basis points to 6.5 per cent, the bank announced in a release on July 11. "The policy was adopted to ensure that inflation will return to its target path after the fuel price hike. In addition, Bank Indonesia will also strengthen its policy mix," the release said. These measures include "providing adequate liquidity in the foreign exchange market,  enhanced loan-to-value regulation in the property sector and minimising inflationary pressure to maintain macroeconomic stability as well as financial system stability." Indonesia in June became ASEAN’s first major...

Reading Time: 1 minute

Indonesian-rupiahIndonesia’s central bank raised its benchmark interest rate double than economists forecast by 50 basis points to 6.5 per cent, the bank announced in a release on July 11.

“The policy was adopted to ensure that inflation will return to its target path after the fuel price hike. In addition, Bank Indonesia will also strengthen its policy mix,” the release said.

These measures include “providing adequate liquidity in the foreign exchange market,  enhanced loan-to-value regulation in the property sector and minimising inflationary pressure to maintain macroeconomic stability as well as financial system stability.”

Indonesia in June became ASEAN’s first major economy to boost rates in 2013, facing one pf Asia’s worst performing currencies.

Inflation is expected to peak in July after the fuel price rise of June and the beginning of the fasting month of Ramadan in the world’s most populous Muslim nation. Higher housing costs are also contributing to inflation.

The Indonesian economy grew 6.02 per cent in the first three months of 2013 from a year ago, after expanding 6.11 per cent from the last quarter of 2012. The central bank has lowered its economic growth forecast for 2013 to between 5.8 to 6.2 percent from a previous estimate of as much as 6.6 per cent.

1 US dollar stood at 9,970 Indonesia rupiah on July 11.

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