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Indonesian central bank sharpens inflation forecast to 3.6 percent

Staff Writer |
The central bank of Indonesia has redressed its inflation estimate for this year after putting on hold months of neutral stance and rising twice its benchmark interest rate in the last two weeks, saying option for persistence of the tight policies remains in place.

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Governor of the lender Perry Warjiyo has said that the lender projected consumer price index 3.6 percent at the end of this year, compares with its earlier projection hovering 2.5 to 4.5 percent.

The new expectation came after the bank rose twice its seven-day reverse repo rate 50 basis points on May 17 and May 30.

"We will pay more heed to various developments, including external gauges such as the Fed. fund rate, fiscal impact from yield of the U.S. treasury securities and risks of global financial market," said Warjiyo.

The recent central bank tight policies have pared rapid descent of rupiah against the greenback as it has bounced back from the level of 14,200 days ago, and traded up 13,951 on Thursday, according to the central bank data.

Indonesian Finance Minister Sri Mulyani has asserted that the economic growth would hover 5.17 to 5.4 percent this year from previous estimate of 5.4 percent on the wake of tightening policies.

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