Inflation may slow even further in June, providing the central bank room to cut its benchmark interest rate to spur economic growth, Bank Indonesia officials said Monday.

"We predict year-on-year inflation in *June* may be less than 4 percent, about 3.8 percent," said BI deputy governor Hartadi A. Sarwono.

In May, inflation rose 6.04 percent from a year earlier, according to the Central Statistics Agency (BPS). BI cut its rate for seven straight months to 7 percent on June 3 in a bid to bolster growth in Southeast Asia's fastest-growing economy.

The BPS is scheduled to make an official announcement of June's inflation on Wednesday.

"There's still room *for the BI rate* to move, but by how much and when is another matter," acting BI Governor Miranda S. Goeltom said in Basel, Switzerland, where she attended a meeting of central bankers worldwide, Bloomberg reported.

"Certainly the inflation rate is going down."

Hartadi said inflation might slow as the base year, used as the reference year for determining a figure, of inflation in June last year was already high, due to the price hike for subsidized fuels in May 2008.

But he added BI would take into account factors other than inflation prior to determining its benchmark interest rate at the central bank's collegial meeting Friday.

"It's not only June's inflation, but other forward-looking evaluations," Hartadi said.

"We'll see whether the pressure of commodity prices, including oil, will have an impact on inflation before we make a decision."

He added Indonesia's economy in the second quarter this year might experience slower growth compared to the first quarter, when the country scored a positive 4.4 percent growth amid the global economic downturn that led most other countries' economies to plunge.

"*Growth* in the second quarter used to decline seasonally. But let's wait *for the actual figure*," he said.

Indonesia's economic growth will depend on global growth, mainly in the economies of the United States, China, South Korea and India.

"If our trading partners improve, we can expect our growth to be down to external factors, in addition to domestic consumption," he said.

Indonesia's main trading partners are China, the United States and Japan, according to the BPS.

Finance Minister Sri Mulyani Indrawati said exports and imports might have improved in the second quarter, contributing to growth.

"Investment is also not as bad as in the first quarter," she said.

"We'll see whether these two variables will be better."

But she hinted that because of the relatively high growth in the second quarter of 2008, this quarter's growth might be slower.

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