Bank Indonesia sees room for further rate cuts after CPI drop

Jakarta (ANTARA News) - The month-on-month drop in April consumer price index (CPI) creates room for further interest rate cuts over the rest of the year, Bank Indonesia governor Burhanuddin Abdullah said.

Central Bureau of Statistics announced yesterday that the CPI in April declined 0.16 pct from March although it rose 6.29 pct year-on-year.

"The deflation shows that the possibility to achieve inflation target is increasing and there is room to adjust further the BI rate," Abdullah was quoted by XFN Asia as saying.

BI rate is the central bank's benchmark interest rate. Bank Indonesia has trimmed the rate by 375 basis points since last May to 9.0 pct currently.

Last month, the central bank's board of governors voted to leave the rate unchanged. The next meeting is slated for next Tuesday.