BI RATE CUT STILL UNABLE TO STIMULATE REAL SECTOR : OBSERVER

Jakarta, Dec 5 (ANTARA) - The lowering of the benchmark interest rate (BI Rate) by 25 basis points by Bank Indonesia (BI or central bank) on Thursday is likely to prove still incapable of stimulating the real sector, a money market analyst said.

"The real sector has not yet moved due to the fact that bank interest rates are still high, namely 17 percent," Edwion Sinaga, o president director of PT Financ Corpindo, said here on Friday.

He was commenting on the BI board of governors' decision on Thursday to lower the benchmark interest rate by 25 basis points to 9.25 percent.

Sinaga said the BI Rate should all along have been lowered because the inflation rate had begun showing a downward trend followed by a decline in international commodity prices.

Besides, it was also supported by the lowering of premium gasoline price from Rp6,000 per liter to Rp5,500 per liter.

But it was still difficult to stimulate the real sector with Thursday's cut in the BI Rate, Sinaga said.

Therefore, he said, the cut in the BI Rate was expected to be followed by adjustments in the interest rates of commercial banks.

"The banks' interest rates at 17 percent is still considered high by the business world," he added.