JAKARTA, Nov. 4 (Xinhua) -- Indonesian central bank on Wednesday refrained from reducing its benchmark interest rate for a third straight month and kept it on hold at 6.5 percent, saying that the inflation performance still could not push to raise the borrowing cost.

    The decision was in line with the expectations of seven analysts surveyed by Xinhua.

    "The central bank today decided to put rate on hold again at the level of 6.5 percent, which is still consistent with the target of inflation in 2010. The inflation in October recorded a decline and it was lower than its historical record," the bank said in a statement.

    Indonesia's annual inflation rate in October slowed to 2.57 percent, which gave more rooms for the authorities not to follow some other countries to raise the lending rate.

    "The economic growth is likely still weak and the inflation pressure is forecast to increase next year due to primarily the government plan to raise subsidized oil prices as the global oil prices climb. Besides, the rupiah value is still labile," said Fauzi Ichsan, an economist at Standard Chartered.

    Indonesia's economy grew 4 percent in the second quarter of this year, for the whole year the central bank estimates that the gross domestic product to grow between 4 to 4.5 percent.

    Indonesian President Susilo Bambang Yudhoyono has said that the economy is predicted to grow more than 5 percent next year.

    "The central bank anticipates on the rise of inflation next year. Our economic growth and the global economic recovery still has no significant influence. Our export still decreases now," said Martin Pangabean an economist of Mandiri Security.

    The bank forecast that the inflation would be below target of 4.5 + 1 percent this year and 5 + 1 percent for the next year, as the commodities prices and demand started to rise at the international market.

    The World Bank (WB) estimated that Indonesia's economic growth to reach 4.3 percent this year, or higher than its initial estimation of 3.5 percent, the bank senior economist William E. Wallace said here on Wednesday.

    The bank said that banking sector generally showed a stability with capital adequacy ratio still high and the non-performing loans still managed below 5 percent.

    The Indonesian central bank had slashed its borrowing cost for a ninth straight month, starting from December 2008, with 300 basis point cut, as an effort to protect the country from the fallout of the global financial routs.

    Deputy governor of the bank Hartadi Sarnowo said on Oct. 22 that the bank had limited rooms to reduce rate, signaling that the rate may rise for the next time.

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