Central Bank Chief Upbeat over Inflation

JAKARTA ~ The central bank chief said this week he was hopeful Indonesia’s economy had already passed the worst of surging inflation triggered by a government fuel price hike.

“Our hope is that (annual) inflation in July can be lower than in June. I hope that the (June figure of) 11.03 percent was the peak and that we are over that,” Bank Indonesia (BI) chief Boediono told reporters.

The June figure was the highest in almost two years and was brought on by a government decision in May to raise fuel prices by an average of 30 percent to rein in the cost of its multibillion-dollar subsidy scheme.

Boediono had earlier said inflation could range between 11.5 and 12.5 percent by year’s end and would drop to 6.5 to 7.5 percent in 2009.

“Bank Indonesia still sees inflation as its main focus in its monetary control for the next year or year and a half ahead,” Boediono said.

Aggressive monetary policy, including BI’s decision at the start of this month to raise its benchmark rate for the third time to 8.75 percent, was not a threat to growth, Boediono said.

“Our growth is high, our growth indicators are good so there are no worries about growth,” Boediono said.

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