VIVAnews - Citigroup Indonesia figured that the BI Rate will have more cut, projected to have reached 7.25 percent by mid 2009, in line with the falling inflation rate.
An economist of Citigroup Indonesia Johanna Chua viewed Bank Indonesia (BI)'s decision in cutting the BI Rate by 50 basis points to 8.25 percent has been in accordance with market's expectation.
"The decision has led to good impact on the market (Wednesday)," Chua said on Wednesday, Feb 4.
As of December 2008, Bank Indonesia has cut the BI Rate by 125 basis points.
The measure was taken due to a decrease in yearly inflation of 9.17 percent by January 2009, compared to December 2008 with 11.06 percent in line with fuel price decrease.
In the future, Chua revealed that in addition to the on-going decrease in inflation rate, it is expected that the Indonesian government will gain loans from donor countries.
"This will encourage BI to cut interest rate by 100 basis points in the next few months," Chua said. In fact, Chua was optimistic the BI Rate will touch 7.25 percent by mid 2009.
However, Chua emphasized the BI Rate projection will depend on the assumption that no unexpected blow will hit the Rupiah. The government's ability in gaining loans of US$6 billion will affect the Rupiah.
Translated by: Bonardo Maulana Wahono
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