(Corrects alert and bullet points to make clear that the central bank referred to the primary reserve requirement and that it should be compared to a previous level of 5 pct not 7.5 pct.
* C.bank says concerned about rising inflationary pressures
* Raises primary reserve requirement to 8 pct from 5 pct
* Leaves interest rates unchanged at 6.5 pct, as expected
* C.bank sets loans-to-deposit ratio at 78-100 pct
JAKARTA, Sept 3 (Reuters) - Indonesia's central bank kept its interest rate at a record low of 6.5 percent as expected on Friday but raised its primary bank reserve requirement, saying it was concerned about rising inflationary pressures.
Announcement date Rate (percent)
- The central bank has consistently said it will leave its interest rate unchanged all year if inflation meets its end-2010 target range of 4 percent to 6 percent, as it seeks to spur bank lending and growth.
- Annual inflation picked up to a 16-month high of 6.44 percent in August, data showed this week. However, the figure was lower than expected, and all economists polled by Reuters before the CPI data had predicted Bank Indonesia would leave rates on hold on Friday.
- Annual inflation in July and August picked up because of higher electricity tariffs and food prices. Unseasonally heavy rains in recent weeks have disrupted crop production and distribution, leading to higher food prices at a time when demand is particularly strong because of the special meals prepared to celebrate the end of fasting each day during Ramadan and the festivities at the end of the fasting month.
- Economists expect the central bank to start bringing rates back to levels seen before the global financial crisis in fourth quarter, to head off inflationary pressures later on.
- Bank Indonesia cut its benchmark rate by a total of 3 percentage points between December 2008 and August 2009 to shield the economy from the global financial crisis, and has left the rate at a record-low 6.5 percent since then.
- BI rate details.....BIPG
- Central bank website.........www.bi.go.id
(Editing by Neil Fullick)