[Kabar-indonesia] BI Sees "Big Scope" For Future Monetary Easing [+JP update]

[JoyoNews at aol.com]

also: RI sees `very big possibility' of easing monetary policy;
and JP update: Year-on-year inflation eases slightly in July 

Bank Indonesia: "Big Scope" For Future Monetary Easing

JAKARTA, August 2 (Dow Jones) -- Benign inflation data provide
policy-makers "big scope" for monetary policy easing, Bank Indonesia
Senior Deputy Governor Miranda Gultom said Wednesday.

"There's a big scope for monetary policy easing in the future if we
look at the inflation trend in Indonesia, which is falling faster than
expected," Gultom told reporters, without providing any specific
projections on benchmark interest rate movements.

Gultom's comments are likely to stoke market anticipation of a likely
cut next week in the benchmark Bank Indonesia one-month rate, which
now stands at 12.25%.

Bank Indonesia's Board of Governors will decide the interest rate at a
regular monthly meeting on Tuesday. [ 02-08-06 0333GMT ]

Analysts are predicting that Bank Indonesia, bucking an international
tightening trend, will cut its benchmark rate by up to 50 basis points
on Tuesday due to declining inflation in July.

Indonesia's consumer price index eased to 15.15% year-on-year in July
from 15.53% in June, the official Central Statistics Agency said
Tuesday. The month-on-month inflation rate was unchanged from June at
0.45%.

Central bank officials have reiterated in recent weeks that declining
inflation will allow them to continue easing monetary policy.

The latest easing cycle began in May, with a 25-basis-point cut in the
benchmark rate to 12.50%. The central bank cut the benchmark Bank
Indonesia rate by an additional 25 basis points to 12.25% in July.

Policy-makers want to cut rates to help jump-start faltering economic growth.

Indonesia's government has an official forecast for 6.2% growth in
gross domestic product this year, compared with 5.6% growth in 2005.

But high inflation and interest rates, which followed the government's
move to effectively more-than-double fuel prices in October 2005, have
damped economic activity this year, analysts and government officials
say.

Indonesia's economy likely expanded 4.59% year-on-year in the first
six months of 2006, Minister of Finance Sri Mulyani Indrawati said
last month. That would mark a deceleration from 6.3% growth in the
same period of 2005.

Indonesia's official Central Statistics Agency will issue
second-quarter GDP data on Aug. 15.

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RI sees `very big possibility' of easing monetary policy 

JAKARTA, Aug. 2 (Bloomberg)" Indonesia's central bank sees a "very big 
possibility" of easing monetary policy at a meeting next week after inflation slowed 
more than expected in July, Senior Deputy Governor Miranda S. Goeltom said.

"Inflation in Indonesia is on a downward trend," Miranda told reporters in 
Jakarta Wednesday. "Inflation has been declining faster than expected and 
therefore there is a very bigpossibility of easing monetary policy."

Consumer prices in Southeast Asia's largest economy rose 15.2 percent from a 
year ago, after gaining 15.5 percent in June. That was less than the median 
15.3 percent forecast of 15 economists in a Bloomberg News survey. 

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The Jakarta Post
Wednesday, August 2, 2006

Year-on-year inflation eases slightly in July 

Indonesia's on-year inflation eased in July to 15.15 percent, down slightly 
from 
15.53 percent the previous month, the Central Statistics Agency (BPS) 
announced Tuesday.

BPS director Rusman Heriawan also announced that inflation in July stood at 
0.45 percent, giving a January-July rate of 3.33 percent. 

Inflation has been quite high ever since domestic fuel prices went up by a 
whopping 126 percent on average last October. 

However, both the government and the central bank insist that single-digit 
full-year inflation is pretty much attainable by the end of the year. 

The BPS also said that core inflation -- which excludes volatile prices like 
food and regulated prices such as fuel -- stood at 0.36 percent in July, 3.10 
percent from January to July, and 9.58 percent year-on-year in July. 

Driving inflation up were a 0.99 percent increase in the unprocessed food 
prices, a 0.31 percent increase in the prices of processed food, beverages, and 
tobacco and cigarettes, a 0.21 percent rise in the prices of housing, water, 
electricity, and oil and gas, a 0.36 percent increase in clothing prices; a 0.06 
percent hike in healthcare costs, a 0.69 percent increase in the cost of 
education, recreation and sport, and a 0.08 percent rise in the cost of 
transportation, communications and financial services. 

According to the report, of the 45 cities surveyed, 39 cities saw the 
consumer prices index increase last month, with the biggest increase being in Palu at 
3.65 percent and the lowest in Surakarta at 0.02 percent. Prices actually 
fell in 6 cities, with Lhokseumawe in Nanggroe Aceh Darussalam seeing the biggest 
drop at 3.05 percent and Palangkaraya the lowest at 0.03 percent. - JP 

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Joyo Indonesia News Service
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