Indonesian Interest Rate Cut

June 18, 2020

Indonesia’s policy interest rate has been reduced 25 basis points to 4.25%. This was the third such drop in 2020 following 25-basis point cuts in February and May. Officials at Bank Indonesia likely was sliced 25 basis points from their overnight deposit and lending rates to create a new corridor that runs from 3.5% to 5.0%. A released statement from Bank Indonesia leaves the door open to additional interest rate relief, contingent upon the evolution of the global pandemic and the behavior of Indonesia’s currency. Like other central bank statements today, officials note that downward pressure on growth seems to have passed an inflection point recently, but they nonetheless anticipate a 0.9% to 1.9% average contraction of GDP in 2020.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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