Indonesia may keep interest rate unchanged at 6.5%

Indonesia's Central Bank on Wednesday refrained from reducing its benchmark interest rate for a third straight month, keeping it at 6.5 percent, and saying that the inflation rate does not yet justify raising the cost of borrowing.

The decision was in line with the expectations of seven analysts surveyed by Xinhua. Indonesia's annual inflation rate in October slowed to 2.57 percent, which gave more room for the authorities not to follow the lead of other countries which raised their lending rates.

Indonesian President Susilo Bambang Yudhoyono said that the economy is predicted to grow more than 5 percent next year. The deputy governor of the Central Bank, Hartadi Sarnowo, said on October 22nd that the bank has limited flexibility to reduce the lending rate, signaling that it may rise soon.

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