Monetary tightening will continue during the remainder of 2011, following BI's decision on February 4th to raise its main policy interest rate, the BI rate, by 25 basis points, to 6.75%. Previously BI had left the rate at 6.5%, the lowest level since it was introduced in 2005, owing to concerns about the effect that a widening interest rate differential with major global economies would have on capital inflows (given that rates in such countries are likely to remain low). Continued concerns about capital inflows, as well as signs that government intervention has succeeded in stabilising inflation, mean that BI's governors will raise interest rates only gradually this year. BI's governors left interest rates on hold at their most recent meetings in March, April and May, preferring to use other policy options, notably appreciation of the rupiah, to address the strengthening of inflationary pressures. But, with core inflation now near to the 5% level at which BI has indicated it will tighten policy, the next increase in the BI rate is likely to come in the next month or so. Interest rates will continue to rise in 2012 before stabilising in 2013-15.