Bank Indonesia studies possible hike of policy rate

JAKARTA (REUTERS) - Bank Indonesia is studying the possibility of hiking its benchmark policy rate to deal with worries on rising inflation, the governor said on Friday.

In March, the country's annual inflation surged to a nearly two-year high of 5.9 per cent, above the 5.5 per cent top end of the central bank's target range for the year. The increase, from February's 5.31 per cent, was due mainly to higher food prices.

"Together with the government, we are studying the possibility (to increase the BI rate). BI will not be hasty to increase its benchmark rate. But if we have to do it, then what can we do?" Governor Darmin Nasution told reporters.

The board of governors will hold a policy meeting on April 11. The benchmark rate has been kept at a record low 5.75 per cent since February 2012, when it was reduced 25 basis points.

Mr Nasution, whose term as governor ends in May, also said that the central bank is still talking with Singapore monetary authorities about the proposed purchase of PT Bank Danamon by Singapore's DBS Holding Group.

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