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Expectations of benign inflation this year mean the central bank is open to further loosening monetary policy despite substantial cuts to the benchmark interest rate in recent months.

“A slowing global economy will reduce inflation pressure from the import side,” Perry Warjiyo, a director of monetary and research affairs at Bank Indonesia, said in Jakarta on Wednesday.

Perry, BI spokesman Difi A. Johansyah and other central bank officials visited the office of BeritaSatu Media Holdings, the parent company of the Jakarta Globe, on Wednesday.

Perry said inflation might slow further, suggesting that consumer prices would remain in check throughout this year. Indonesia’s inflation slowed to a 22-month low of 3.65 percent in January, giving room for the central bank to cut its policy rate.

Bank Indonesia is maintaining its inflation target at 3.5 to 5.5 percent this year, Perry said.

The central bank has reduced its policy rate by one percentage point since October — including last week’s surprise quarter-percentage-point cut — to 5.75 percent, the lowest since it was set at 6.50 percent in July 2005.

Economists and analysts supported the central bank’s rate cut, saying Indonesia should favor economic growth this year rather than focus on inflation.

But Perry said there were several factors that could stoke inflation, including the government’s plan to raise power rates and the proposed plan to increase the price of subsidized fuel from the first half of this year.

The government plans to curb its power subsidy spending by increasing electricity prices by 10 percent from April 1. The proposed plan is awaiting approval from lawmakers.

“Apart from the oil price, all commodity prices are showing a downward trend,” said Perry, who is tipped to run for BI deputy governor late this year.

Perry said that the government’s proposals to either restrict the use of, or increase the price of, subsidized fuel would spur inflation.

Perry also said the government’s plans to increase its rice purchase price, or HPP, by 28 percent next month to match market rates would not stoke inflation.

Under the current HPP, unhusked rice sells at Rp 4,300 (48 cents) a kilogram, while husked rice fetches Rp 6,000 a kilogram, both below market rates. HPP is the purchase price the government guarantees farmers to absorb excess yields after the next month’s harvest.

“After these factors have been taken into account, inflation this year will still be at around 5 percent,” Perry said. “With that, there is still room for lowering the BI rate.”

The Ministry of Finance on Tuesday lowered its forecast for the nation’s economic growth this year to 6.5 to 6.6 percent, from the forecast of 6.7 percent it set in the state budget, to reflect the impact of the euro zone’s sovereign debt crisis and the global slowdown. Bank Indonesia cut its 2012 growth forecast to 6.3 percent from 6.7 percent.