Bank Indonesia (BI) has raised its benchmark rate for the fifth consecutive time, from to 9 to 9.25 percent, amid inflationary pressures during the Muslim fasting month of Ramadan.
"The domestic inflationary pressure is still high from growing aggregate demand," the central bank governor Boediono told a press conference Thursday.
Boediono said that although pressure from the global energy, food, and commodities prices had subsided, they still needed to be closely watched.
The decision to increase the key rate was made by the BI board of governors to ensure the country's economic and financial stability, after observing and considering the global, regional and domestic economy development and prospects.
Boediono also said the rate increase would help achieve the medium range inflationary goals.
Analysts expect full-year inflation in 2008 to be between 11 and 12 percent.
BI expects inflation will reach between 6.5 percent and 7.5 percent next year.
