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Jakarta (ANTARA News) - State Minister for National Development Planning Paskah Suzetta has expressed hope Bank Indonesia (the central bank/BI) will not raise its key rate to more than 9 percent, because it will deal a major blow to the real sector.

"If the current BI Rate of 8.5 percent can be maintained it will be very good," said Suzetta, who is also chief of the National Development Planning Agency (Bappenas) here on Friday.

He expressed hope a rise in lending rates would not worsen the real sector`s difficulty due to an increase in production costs.

The central bank decided at a meeting of its board of governors on Thursday to raise its benchmark interest rate, locally known as BI Rate, by 25 basis points to 8.5 percent in reaction to the high inflation rate in May due in part to the fuel oil price hike.

Last month, Bank Indonesia also raised the key rate by 25 basis points to 8.25 percent after it remained unchanged at 8 percent for the fourth month in a row since December last year.

"The BI Rate of 8-8.5 percent will not deal a blow to the real sector," Suzetta said.

Source