Bank Indonesia (BI) on Tuesday raised its benchmark interest rate to 11 percent in efforts to curb the country's inflation rate, which is predicted to hit a two-digit level after the government raised fuel prices by an average 126 percent early this month.

"The increase in the BI rate is a response taken by the central bank to keep the inflation expectation within its medium-term target," central bank governor Burhanuddin Abdullah told reporters.

Since it was introduced on July 5, the BI rate has been raised four times to follow the hike in US Federal Reserve's rate, to stop the continued loss of the rupiah and to ease inflationary pressures.

Earlier on Monday, State Minister for National Development Planning Sri Mulyani Indrawati warned that the inflation may grow to 12 percent from the last 9.06 percent year-on-year in September,the highest level in 33 months.

Source: Xinhua