REPUBLIKA.CO.ID, JAKARTA - Bank Indonesia is committed to guard against inflation and also government policies related to subsidized fuel prices and compensation programs. Governor of BI, Darmin Nasution said  BI stayed alert that the inflation pressure could arise despite the Consumer Price Index (CPI) showed deflation in April 2013.

"BI will guard against some inflation risks and exchange rate pressure. We will adjust the monetary policy response whenever needed," Nasution said on Tuesday. 

BI also maintains the BI rate at level of 5.75 percent which is still consistent with the inflation target of 2013 and 2014, from 3.5 to 5.5 percent. Acting Minister of Finance, Hatta Rajasa said government had decided the fuel subsidies would be increase from 4,500 IDR to 6,500 IDR per liter, while diesel price would be increased from 4,500 IDR to 5,500 IDR per liter. Yet, the decision should be discussed with the House of Representative because it involved revision of the State Budget 2013.

"We were estimate that additional inflation due to dual fuel price policy approximately 1.5 to 1.6 percent," Rajasa said. Therefore, government should intervene and control food inflation. 

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