BI To Maintain 'Tight Policy'

August 2004 | Market Strategy

Bank Indonesia (BI) governor Burhanuddin Abdullah has stated that the central bank will maintain its 'tight bias' monetary policy over the course of the next couple of months, and may yet need to raise interest rates in order to preserve macroeconomic stability, which is its key priority. Although CPI rose to 7.20% y-o-y in July, BI did not raise its medium term inflation target of between 6.0% and 7.0%. (The Ministry of Finance recently raised its forecast for 2004 to 7.00%, from a target of 6.50% in the state budget.) It attributed the inflationary pressures to higher incomes, which have

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