Bank Indonesia leaves benchmark rate unchanged at 8.0 percent - UPDATE |
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Tue, 08 Jan 2008 08:54
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JAKARTA (Thomson Financial) - Bank Indonesia (BI), the country's central bank, decided Tuesday to leave its benchmark interest rate at 8.0 percent, BI governor Burhanuddin Abdullah said.'Bank Indonesia today decided to keep the BI rate unchanged after evaluating economic developments in 2007 and the outlook for 2008 as well as various economic risks the country may face this year, including inflationary pressure,' Abdullah told a press conference.The consensus forecast of 10 economists polled by Thomson Financial was for the central bank to keep the rate unchanged rather than continue to cut it, given rising domestic inflation.Abdullah said the annual inflation rate in the past two years was in line with the central bank's target. In 2007, inflation was 6.59 percent, which was within the central bank's target range of one percentage point either side 6 percent.Last year the central bank cut the BI rate by a cumulative 150 basis points to 8.0 percent and bank lending rates have declined as a consequence.At the end of November, banks' average rate on working capital loans was 13.16 percent, compared to 15.07 percent at the end of 2006. The average rate on investment loans was 13.19 percent, down from 15.10 percent, and the average rate on consumer loans was 16.4 percent, down from 17.6 percent.'The decline in interest rates helped improve banks' performance and their intermediary role,' Abdullah said.The banks' loan-to-deposit ratio was 69.9 percent, Abdullah said. He gave no comparative figure.Banks' gross non-performing loans (NPLs) accounted for 5.41 percent of their portfolios at the end of November, compared to 6.98 percent a year before. Net NPLs accounted for 2.29 percent, down from 3.63 percent.Abdullah said national banks' outstanding loans in the first 11 months of 2007 amounted to 1,004.6 trillion rupiah, 20.6 percent more than in the corresponding period a year before.In November alone, bank loans were 23.5 percent higher than a year before.Abdullah said bank loan growth is expected to be 24.3 percent in 2007, more than BI's previous forecast of 22 percent.The central bank governor said the rupiah appreciated by 1.8 percent in the first half of last year but weakened by 1.1 percent in the second following the sub-prime mortgage crisis in the US, which rattled the global financial industry.'Overall, the rupiah appreciated by 0.3 percent last year to an average of 9,140 rupiah to the US dollar,' Abdullah said.He said BI expects that the annual rate of economic growth accelerated to 6.5 percent in the fourth quarter of last year and that over the whole year GDP likely grew 6.3 percent.The central bank expects GDP to expand 6.2-6.8 percent this year, driven mainly by consumer spending, exports and investment, Abdullah said.(1 US dollar = 9,454 rupiah)roffie.kurniawan@thomson.comhkp/jmCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Indonesian shares outlook - Higher as benign Nov CPI renews rate cut hopes 