No Interest Rate Rise
Bank Indonesia (BI) will not raise interest rates to dampen inflation, although the inflation rate in January scored record highs in the last year, ie 1.43 percent. “The cure is not raising rates,” said Deputy Governor of BI, Aslim Tadjuddin. Therefore, the high inflation was not caused by the demand for goods that can be muted by monetary policy. People were asked not too worried about soaring inflation. “This situation is not normal due to the tsunami disaster,” he said. The next month is predicted inflation will return to normal.
Aslim also believe that the inflation target set at the BI in this year of six percent plus minus one percent (range 5-7 percent) will be achieved. “I believe inflation will be controlled after the tsunami impact can be overcome,” he said. Inflation that occurred in January and due to the scarcity of goods society needs in the affected areas, so that after the disaster that goods must be supplied to it. Because it was not with the anticipation of monetary or fiscal policy, but by reducing distribution costs, such as transportation costs.