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Jakarta Post

More rate cuts needed to jack up growth, economist says

  • Marchio Irfan Gorbiano

    The Jakarta Post

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Jakarta   /   Wed, July 24, 2019   /  02:27 pm
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Bank Indonesia has slashed its policy rateĀ to bring down the seven-day reverse repo rate to 5.75 percent, and hintedĀ at the possibility of more cuts going forward.(Shutterstock.com/Harismoyo )

Analysts and businesspeople have said that Bank Indonesia (BI) will need to further slash its reference interest rate in order to stimulate the economy. The central bank slashed its policy rate by 25 basis points (bps) on July 18 to bring down the seven-day reverse repo rate to 5.75 percent, while also hinting at the possibility of more cuts going forward amid low inflation and the need to boost GDP expansion. Bahana Sekuritas economist Satria Sambijantoro said that while the current 25 bps cut would stimulate the economy, further easing would be welcomed to jack up GDP growth in the future. “The impact of 25 or 50 bps rate cuts would be minimal to the economy,” said Satria. “If we want to really stimulate the economy, one must be bold to deliver a gradual cycle of monetary easing.” He previously projected a BI interest rate cut by 100 bps within the y...