Since late 2008, Indonesia's central bank has implemented measures to reduce the impact of the global credit situation on Indonesian capital markets and private demand. These measures have improved credit access for households and small firms and boosted domestic demand, driving a revival of GDP growth. Bank Indonesia also cut interest rates steadily until August 2009, when signs of impending inflation risks emerged. Inflation bottomed at 2.41% y/y in November 2009, led by higher commodity and food prices, improved private demand, rising capacity utilization and stronger capital inflows. Inflation has been subdued through H1 2010, but is expected to pick up toward the end of the year. A strong rupiah has helped to contain inflationary pressures.
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