By Arijit Ghosh and Michael Munoz
Aug. 4 (Bloomberg) -- Indonesia's central bank may raise its benchmark interest rate for a fourth straight meeting after inflation jumped to a 22-month high in July.
Governor Boediono and his seven colleagues will increase the policy rate by a quarter point to 9 percent, according to 20 of 22 economists in a Bloomberg News survey. The board of governors will meet tomorrow in Jakarta.
Central banks across Asia are raising borrowing costs to contain prices of food and fuel. Bank Indonesia will raise the rate to manage inflation expectations as the nation with the world's largest Muslim population prepares to celebrate Id-ul-Fitr following the fasting month of Ramadan that begins in September, said economist Lana Soelistianingsih. Inflation accelerated 11.9 percent in July, exceeding estimates.
``People will need more money for celebrations,'' said Soelistianingsih from PT Samuel Sekuritas in Jakarta. ``Bank Indonesia should minimize the inflation impact from these demand- side pressures by increasing rates.''
President Susilo Bambang Yudhoyono's government raised fuel prices by about 30 percent in May to reduce its burden of capping pump costs. That made it more expensive to transport food, steel and cement across the 18,000 islands that make Indonesia the world's largest archipelago.
Consumer prices in Indonesia jumped 11.9 percent in July, beating estimates for an 11.2 percent gain, the Central Statistics Bureau reported last week. Prices rose 1.37 percent from a month earlier.
`Remain High'
``We hope that month-on-month inflation will peak in the next one or two months, then it will slow toward the year-end, though year-on-year inflation will remain high,'' central bank Senior Deputy Governor Miranda Goeltom said Aug. 1.
Bank Indonesia in May was the first central bank in Southeast Asia after Vietnam to raise borrowing costs this year. Vietnam increased its benchmark rate in January. India on July 29 raised its policy rate by a more-than-expected half point as inflation accelerated to the fastest pace since 1995.
PT International Nickel Indonesia, the local unit of Cia. Vale do Rio Doce, the world's largest iron-ore producer and Indonesia's biggest producer of nickel, will announce its second- quarter earnings on Aug. 7.
PT Aneka Tambang, Indonesia's second-largest producer of nickel by market value, said sales in the second quarter of the year fell 4.6 percent as the company produced less nickel and prices declined.
Indonesia's benchmark stock index rose 0.2 percent to 2,248.75 last week, a second week of gains. PT United Tractors, Indonesia's biggest heavy-equipment seller, gained 8.4 percent after first-half profit more than doubled from a year earlier as orders for coal-extraction and construction machinery increased.
The rupiah had its seventh weekly gain on speculation the central bank will raise interest rates. The rupiah increased 0.3 percent, making it the best performer among Asia's 10 most-traded currencies outside Japan. The currency fell 0.1 percent to 9,102 at 10:22 a.m. in Jakarta.
The following are key events for this week and a table of economists' estimates for the BI rate.
Perusahaan Gas Negara stock split Aug. 4
BI rate decision Aug. 5
Medco Energi extraordinary shareholders meet Aug. 7
PT Timah stock split Aug. 8
Indonesia BI Rate Estimates
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Aug. End End
Firm 5 3Q 4Q
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Median 9.00% 9.25% 9.50%
% Estimates at Median 91% 56% 25%
Average 9.00% 9.17% 9.45%
High 9.25% 9.50% 10.00%
Low 8.75% 9.00% 9.00%
Number of Estimates 22 16 16
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Action Economics 9.00% 9.25% 10.00%
ANZ Banking Group 9.00% 9.00% 9.25%
ATR-Kim Eng Capital 9.00% 9.00% 9.00%
Bank Central Asia 9.00% 9.00% 9.00%
Bank Danamon 9.00% 9.25% 9.50%
Bank Intl Indonesia 9.00% 9.25% 9.50%
BNI Securities 8.75% -- --
Credit Suisse 9.00% -- --
Danareksa Securities 9.00% 9.00% 9.00%
Forecast Ltd. 9.00% -- --
HSBC 9.00% 9.25% 9.75%
Ideaglobal 9.00% 9.00% 9.00%
ING Groep NV 9.00% -- --
Lehman Brothers 9.00% -- --
Mandiri Securities 9.00% 9.25% 9.50%
Moody's Economy.com 9.00% 9.25% 9.75%
Morgan Stanley 9.00% -- --
PT. Mega Capital 9.00% 9.25% 9.75%
Samuel Sekuritas Indonesia 9.00% 9.25% 9.75%
Standard Chartered 9.00% 9.25% 9.50%
Thomson IFR 9.25% 9.50% 10.00%
UOB Group 9.00% 9.00% 9.00%
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To contact the reporters on this story: Arijit Ghosh in Jakarta at aghosh@bloomberg.net
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