Another Indonesian Central Bank Rate Cut

February 18, 2021

The Board of Governors of Bank Indonesia as expected authorized a 25-basis point cut of its seven-day reverse repo rate to 3.5%, which brings the cumulative reduction since the start of last year to 150 basis points. The previous easing was done just 3 months ago. A released statement observes low inflation, which at 1.55% and expected to stay within target, a stable exchange rate, and a resilient external sector and financial system. Monetary policy is being coordinated with fiscal policy to promote Indonesia’s recovery. Real GDP fell 2.1% in 2020 and was 4.3% below its year-earlier level in the final quarter. Projected growth this year was revised slightly lower.

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