Bank Indonesia (BI) has slashed the benchmark interest rate by 25 basis points to 7
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The Jakarta Composite Index (JCI) inched-up 5.8 points or 0.1 percent to 4,518.98 at Friday's opening, while the rupiah tried to leave the 13,900 level, to 13,894 against the US dollar, a day after terror attack struck Jl. MH Thamrin, one of the city's main business areas.
Indopremier Securities analyst Ikhsan Bunarto said that Bank Indonesia's (BI) decision to reduce the benchmark interest rate gave a positive signal, as the market expected such measure would give a boost to the sluggish economy.
He argued that the attack was not the primary cause of the market drop on Thursday, as the rupiah and the JCI had entered the red zone since the opening session.
'In the [Thursday] morning, the stock market benchmark was down following the global markets which retreated, including the US Dow Jones. The blasts did not have a massive impact on the economy and business, only additional [bad] sentiments,' he told thejakartapost.com.
After maintaining its rate for 11 consecutive months, Bank Indonesia (BI) has slashed the benchmark interest rate by 25 basis points to 7.25 percent.
The first rate cut since February 2015 was decided on after a BI board of governors meeting that was attended by the Coordinating Economic Minister Darmin Nasution. It is the first time the BI has conducted such meeting with a government representative in attendance.
At the same meeting, BI held the deposit facility rate and lending facility rate at 5.25 percent and 7.75 percent, respectively.
Senior economist at Kenta Institute Eric Sugandi said that it was the right time for a rate cut, as inflation and current account deficit (CAD) were in a controllable state and the rupiah's movement was stable. (ags)
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