Agence France-Presse . Jakarta

Bank Indonesia, the country's central bank, left its benchmark interest rate at 8.0 per cent after assessing last year's economic data and the outlook for 2008, its governor said Tuesday.

'Bank Indonesia (Tuesday) decided to keep the BI rate unchanged after evaluating the economic developments in 2007 and the outlook for 2008, as well as various economic risks the country may face this year, including inflationary pressure,' Burhanuddin Abdullah told a press briefing.

Economists had been expecting the rate to remain unchanged given rising domestic inflation.

Indonesia's inflation rate eased slightly in December, coming in at 6.6 per cent against a year ago. The figure was above the government forecast of 6.0 per cent but within the central bank's target of 5.0 to 7.0 per cent.

Last year the central bank cut the BI rate by a cumulative 150 basis points to 8.0 per cent and bank lending rates have declined as a consequence.

At the end of November, banks' average rate on working capital loans was 13.2 per cent, compared to 15.1 per cent at the end of 2006. The average rate on investment loans was 13.2 per cent, down from 15.1 per cent, and the average rate on consumer loans was 16.4 per cent, down from 17.6 per cent.

'The decline in interest rates helped improve banks' performance and their intermediary role,' Abdullah said.
     

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