Indonesian C. Bank to continue "neutral monetary policy"

Indonesia will continue applying the so-called neutral monetary policy aimed at preserving national economy stability amid uncertainty in global economy at present, a senior official at Indonesian central bank, Bank Indonesia (BI), said here on Friday. "We will continue the monetary policy that means neither tightening nor loosening the economy," Perry Warjiyo, BI Executive Director for Economy and Monetary Policy said here. The implementation of the policy was manifested in the central bank's recent decision to hold rate benchmark at record-low 5.75 percent as it still fits to cushion insignificant pressure from controllable inflation in the country, he said. "The decision to hold the rate was based on inflation and growth estimations within the next two years. The 5.75 percent rate correctly reflects results of our estimation," Perry added. That level of rate also fits with the government aim to preserve growth above 6 percent, he said, adding that the central bank considers of no need to reduce the rate furthermore as the growth rate is still in the expected range. "We had reduced the rate from 6.00 to 5.75 percent in February this year. Other emerging economy, like South Korea, had just reduced its rate to boost up its growth," he said as quoted by the Antara news agency. The policy to reduce the rate in February eventually gave positive impact to national growth, whose target was revised to 6. 3 percent this year from the initial 6.5 percent, according to Perry. Like other countries in Asia, Indonesian growth is exacerbated by the global crisis incited by economy downturn in Europe and the United States, the world's most regions that imports commodities from Asia. Due to such a situation, International Monetary Fund and the World Bank have recently revised their growth estimation of Indonesia this year to 6 and 6.1 percent respectively.