Indonesia c.bank says won't hesitate to raise rates if needed

JAKARTA Thu Feb 6, 2014 5:43am EST

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JAKARTA Feb 6 (Reuters) - Indonesia's central bank chief said he will stick to a tight monetary policy this year, pointing to the downside risk from inflation and other economic factors.

"The improvement of the economy in 2013 is still ongoing. BI (Bank Indonesia) will maintain conditions towards a tightening direction... if it requires an adjustment, then BI will not hesitate to do it," Governor Agus Martowardojo told reporters on Thursday.

Inflation has shown an improving trend in the past three months, but the central bank will keep a close watch on it in coming months because of volatile food prices and adverse weather, he said.

BI's board of governors will meet on Feb. 13 to decide the policy rate. Between June and November, BI raised its key reference rate a total of 175 basis points to 7.50 percent, to cool the economy and contain a ballooning current account deficit.

(Reporting by Adriana Nina Kusuma; Writing by Rieka Rahadiana; Editing by Jonathan Thatcher and Richard Borsuk)

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