From Government of Indonesia

President Urges Banks to Cut Lending Rates

Banks should lower their lending rates in line with the reduction of the benchmark interest rate by the central bank to boost investment, President Susilo Bambang Yudhoyono said.

“Investors and the business community consider that the interest rates in our country are still too high,” Dr. Yudhoyono said in his state-of-the-nation speech, broadcast on Wednesday (31/1/07) night.

The expansion of loans for both investment and working capital had been slow because of high interest rates, he was quoted as saying by XFN-Asia.

Since May, Bank Indonesia (BI) has trimmed the benchmark interest rate, called the BI rate, by 325 basis points to 9.5%. Analysts have said that banks have r been very slow in cutting their lending rates.

Yudhoyono hoped that the BI rate could be reduced further this year, given the tendency of inflation to ease.
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