13-Dec-2010
JAKARTA (Dow Jones)--Bank Indonesia won't raise interest rates to fight inflation for now, even though year-end inflation is expected to be breach its target, Deputy
Governor Hartadi Sarwono said Monday.
"We are aware of the (rising) inflation," Sarwono told reporters. "Now is not yet the time to increase interest rates."
Instead, Sarwono said Bank Indonesia will continue to reign in inflation by absorbing excess liquidity, such as by increasing commercial banks' reserve requirements and through open money market operations.
The central bank has so far been reluctant to raise interest rates for fear of attracting further inflows of so-called hot money.
Sarwono said December inflation will likely reach 6.5% on year and 0.5% on month.
Bank Indonesia has an inflation target this year of between 4% and 6%.
-By Farida Husna; contributing to Dow Jones Newswires; 62-21 39831277; I-Made.Sentana@dowjones.com
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(END) Dow Jones Newswires
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