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Indonesians cut rates, driven by inflation
Last Updated(Beijing Time):2007-07-06 13:55

Indonesia's central bank yesterday cut its interest rate for the 13th time since May last year to accelerate economic growth after inflation eased.

Bank Indonesia Governor Burhanuddin Abdullah reduced the rate used as a reference for bill sales by a quarter of a percentage point to 8.25 percent, the lowest since the measure was introduced in July 2005.

Ten of 16 economists surveyed by Bloomberg News expected the move.

"Economic growth this year and in 2008 may be faster than previously forecast because of rising exports and higher consumer spending," Abdullah told reporters at a press conference in Jakarta.

"Inflation continues to be under control and is trending lower."

The cut may encourage banks, such as PT Bank Central Asia, Indonesia's second-largest financial services company, to lower lending rates and help the government achieve its 2007 economic growth target of 6.3 percent.

Inflation in Southeast Asia's largest economy slowed to a seven-month low in June.

"We will definitely cut our lending rates," said Aswin Wirjadi, vice president of Bank Central Asia in Jakarta. "Reducing borrowing costs will boost consumer spending."

The rupiah fell 0.1 percent to 9,021 per United States dollar as of 1:29pm in Jakarta yesterday. The currency has declined 2.5 percent against the greenback in the past month, making it the worst performer among Asia's 10 most-traded currencies.

Source:Shanghai Daily 
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