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View all search resultsBI surprises with third consecutive rate cut as Fed move looms
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Bank Indonesia (BI) Governor Perry Warjiyo talks during a live streamed press briefing after the monthly Board of Governors meeting in June. (Courtesy of Bank Indonesia (BI)/-)
B
ank Indonesia (BI) has cut its benchmark interest rate in a surprising move hours before its United States counterpart is expected to reduce borrowing costs in the US as well.
BI Governor Perry Warjiyo announced on Wednesday that the BI Rate was brought down by 25 basis points (bps) to 4.75 percent, marking the third consecutive reduction and the lowest level since October 2022.
Meanwhile, the deposit facility rate was lowered by 50 bps to 3.75 percent, while the lending facility rate fell 25 bps to 5.50 percent.
“This decision is consistent with efforts to support economic growth, keep inflation expectations for 2025 and 2026 within the target range of 2.5 plus/minus 1 percent, maintain rupiah stability and encourage growth in line with the economy’s capacity,” BI Governor Perry Warjiyo said in a press conference following the central bank’s two-day policy meeting.
Perry noted that the rupiah had strengthened 0.3 percent month-to-date as of Sept. 16, supported by BI’s stabilization measures amid persistent global uncertainty.
He added that the balance of payments was expected to remain favorable in 2025, underpinned by a low current account deficit at 0.5 to 1.3 percent of gross domestic product and a surplus in capital and financial transactions.
Perry pointed to a likely move by the US Federal Reserve (Fed) to reduce its own interest benchmark, the federal funds rate (FFR), in a decision later on Wednesday US Eastern Time.
