NISP Bank Indonesia’s Board of Governors has maintained BI rate 6.5% for the twelfth consecutive month.

The Central Bank stated that non-fundamental factors or prices of volatile goods.
The upcoming festive season is expected to push inflation towards the upper
band of targeted inflation. In the future, Bank Indonesia plans to tighten liquidity,
without disrupting the banking industry’s intermediary function, mostly through
adjustment of the reserve requirement.

Domestic economic growth is also said to be on track. In addition to the support
of household consumption, exports have also improved. Investment is also rising,
indicated by non-building investment and import of raw materials and capital
goods. Several sectors with notable growth include the manufacturing industry,
trade, and transportation and communication.

Foreign reserves increased to US$78.8bn, which is equal to 6,03 monthly
government interest payment and import needs. In the financial sector, credit
has grown 19.6% YoY. Gross NPL is below 5%.

Based on the comments, it seems that there will be no sudden rate hike in the
near future as the central bank will look to temper inflation by other methods.
The upbeat outlook in the economic progress could also give some indication that
growth in the 2Q10 could be on the high side. This morning, BPS will release
2Q10 GDP data, where the street expects growth to be 6.00% YoY and 2.55%
QoQ.