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View all search resultsBI surprises with third consecutive rate cut as Fed move looms
Bank 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.
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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)/-)
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ank Indonesia (BI) has cut its benchmark interest rate in a surprising move hours before the much-awaited Federal Open Market Committee meeting by its United States counterpart.
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.
He added that inflationary pressure generally remained low, with the consumer price index up just 2.31 percent year-on-year (yoy) in August amid a decline in administered prices, while core inflation slowed to 2.17 percent yoy.
Perry attributed the former to government measures to bring down fuel prices and airfares and the latter to low imported inflation as well as BI's efforts to anchor inflation expectations.
The BI governor noted that the rupiah had strengthened 0.3 percent month-to-date as of Sept. 16, supported by Bank Indonesia's “consistent” stabilization policy amid heightened global financial market uncertainty and increased foreign exchange conversion to rupiah.
