Indonesian Central Bank Cuts Its Benchmark Rate

LAMPUKUNING- BANK Indonesia cut its benchmark overnight rate one quarter of a percentage point to a record low of 6.50%, while signaling that its easing cycle may be nearing an end as inflation will likely pick up again.
"Bank Indonesia is closely watching the potential for inflationary pressures in 2010, which may rise from a recovery in domestic demand and increasing global commodity prices," the central bank said after a monthly rate-review meeting.
"In this context, future monetary policy will be directed to anticipate the potential of rising inflation, in order to contain inflation at 5% in 2010," it added.
On the economy, Bank Indonesia said growth this year may reach the upper end of its 3.5% to 4% forecast, with the momentum expected to accelerate in the third quarter. By comparison, the government expects the pace of expansion to slow to between 4% and 4.5% from 6.1% last year. [Farida Husna at farida.husna@dowjones.com/I Made Sentana at i-made.sentana@dowjones.com]