[Antara] Inflation rate in 2008 expected to drop: BI

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Bank Indonesia (BI) Senior Deputy Governor Miranda S Goeltom said the country`s inflation rate in 2008 would show a downward trend and was expected to drop to below this year`s figure. "Inflation next year will be lower than this year when the figure is estimated to range between 6.33 percent and 6.7 percent," Miranda said here on Thursday. She said BI`s studies on next year`s inflation rate had used pessimistic assumptions such as high oil and commodity prices. The downward trend in next year`s inflation rate was one of the reasons why BI had lowered its benchmark rate from 8.25 percent to 8 percent, according to Miranda. She said the United States subprime mortgage crisis had not affected Indonesia too much as the performance of the banking sector in the country had remained good. "We don`t see that it affected Indonesia. Data show that banking`s performance remained good and is now even improving," she said. She said banks` non-performing loans had dropped while their capital adequacy ratio (CAR) had increased. "With such resilience, it is just correct for BI to cut its interest rate in an effort to maintain the momentum for growth while continuing to play its stabilization role," she said. Miranda said though there would be sluggishness in the global economy, Indonesia`s economy would record high growth in 2008. "Amid the slow-down of the global economy, we are confident that Indonesia`s economy will experience handsome growth at 6.3 to 6.7 percent with a mid point of 6.5 percent," she added.