Rate Cut at Bank Indonesia

August 22, 2019

There’s been an unexpected second consecutive cut of Bank Indonesia’s 7-day reverse repo rate, which now becomes 5.50%. Overnight deposit and lending rates were also sliced 25 basis points to 4.75% and 6.25%. Indonesia’s central bank interest rates had been lifted by 175 basis points last year, with the final move in November, in order to counter the inflationary threat of rupiah depreciation. The initial rate reduction this year happened a month ago. A statement released by the BI Board today characterizes the easing as a “pre-emptive measure to stimulate growth.” The statement asserts that inflation likely will fall below the target midpoint, notes that global demand is moderating amid trade tensions and geopolitical risks, and points out that fiscal and monetary policies are being loosened in other economies. The statement does not indicate the possible timing of further interest rate changes in Indonesia.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



Comments are closed.