JAKARTA - INDONESIA'S annual inflation accelerated to a two-year high in September, leaving analysts divided over whether the central bank would raise interest rates again this week given the threat of the global credit crisis.

Some analysts said with Monday's data showing annual inflation accelerating to 12.14 per cent in September, against 12.0 per cent forecast by analysts and 11.85 per cent in August, the central bank may be prompted to raise rates to curb inflation and steady a rupiah currency trading at its weakest in more than two years.

But others expected Bank Indonesia (BI) to keep key rates on hold due to rising growth risks amid a global economic slowdown and more scope for aggressive rate cuts in the United States.

'In tomorrow's monetary meeting, we are likely to see the central bank sit on its hands and hold rates steady at 9.25 per cent,' Mr Tan added.

Analysts polled last week had expected Bank Indonesia to raise its key rates by a quarter point to 9.50 per cent at its meeting on Tuesday in its drive to tame inflation.

The central bank has raised key interest rate five times this year to 9.25 per cent from 8.00 per cent in a bid to curb inflationary pressures due to high food and energy prices.

While oil prices have come off their record highs, Indonesia typically sees a rise in consumer prices during the fasting month of Ramadan, which this year fell in September.

Some analysts still expected the central bank to raise rates this week to contain inflation, seen remaining at around 12 per cent this year.

'One of the ways to keep foreign inflows attractive is by raising the BI rate. But, to maintain domestic consumption, we expect Bank Indonesia to limit the rate hike at 9.75 per cent this year,' said economist Winang Budoyo of LippoBank.

The rupiah was unchanged at 9,565 per dollar at 0649 GMT after the announcement while Indonesia's main stock market index was down 6.27 per cent at 0649 GMT, compared with a 5.45 per cent fall before the announcement was made.

The statistics bureau also announced consumer prices rose 0.97 per cent in September from August, against a market forecast of 0.9 per cent and a 0.5 per cent increase in August.

The monthly figure is not seasonally adjusted.

Since Indonesia's last rate rise on Sept 4, the shocks unleashed by Wall Street have prompted expectations the world's central banks will ease policy, or at least refrain from tightening it further, to cushion their economies from the global credit crisis.

But, in Indonesia's case, the central bank may be more concerned, for now, about the rising level of inflation, analysts said.

Bank Indonesia recently introduced a series of measures including lowering its overnight repo rate and offering longer repos to help commercial banks deal with tighter liquidity conditions.

Even before the latest wave of credit turmoil struck global markets, the Indonesian money market had been squeezed by foreign investors' selling local bonds and gradual policy tightening by the central bank in its battle to contain double-digit inflation.

Bank Indonesia had also said it was considering revising its reserve requirement ruling for commercial banks under which the requirement would no longer be linked to banks' loan ratios but to the possible use of debt, in a bid to loosen liquidity.

The statistics bureau also reported Indonesia's August exports rose 30 per cent to $12.5 billion (S$18.3 billion) from a year earlier.

That compares with 32 per cent forecast in a Reuters poll and follows a 25 per cent rise in July.

Total imports, including imports into bonded zones, were $11.86 billion in August. There were no comparative import figures for last year as the statistics bureau only started calculating imports into bonded zones this year. -- REUTERS