The 25 basis point hike - which was widely anticipated by analysts - did not have a significant impact on financial markets. The rupiah held steady at 9,200 per dollar, while stocks remained in negative territory. The bond market also largely shrugged off the rate hike.
In his statement central bank governor Boediono said on Saturday that Indonesia could afford to tackle inflation using monetary tightening without having to worry about the impact on economic growth, and indicated he was ready to do ”whatever it takes” to bring annual inflation below 10 per cent in 2009. On Tuesday, Boediono told parliament annual inflation may fall below 6.5 per cent at the end of 2009, which compares with the authority’s official forecast of 6.5 per cent to 7.5 per cent.