TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
BI delivers surprise cut to jack up growth
Bank Indonesia (BI) delivered a surprise cut of 25 basis points (bps) to its policy rate on Thursday, taking it to 5.5 percent, after trimming it a quarter of a point last month.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Logo of Bank Indonesia, Jalan Thamrin, Jakarta. (JP/Rafaela Chandra)
B
ank Indonesia (BI) is undergoing an aggressive easing cycle in support of President Joko “Jokowi” Widodo’s focus on jacking up domestic consumption to boost the country’s record-slow economic growth.
The central bank delivered a surprise cut of 25 basis points (bps) to its policy rate on Thursday, taking it to 5.5 percent after trimming it a quarter of a point last month. Only 13 of the 34 economists surveyed by Bloomberg projected the move.
The step follows those of global central banks that almost simultaneously cut policy rates to help anchor their slowing economies.
“The policy is consistent with low inflation projected below the midpoint of the target corridor, attractive returns on domestic financial investment assets that supports external stability, as well as a preemptive measure to safeguard the momentum of economic growth moving forward against the impact of global economic moderation,” BI Governor Perry Warjiyo told a press conference.
The lower benchmark, the 7-day reverse repo rate, is expected to bring down bank lending rates and eventually boost consumption and investment, the main drivers of the country’s gross domestic product (GDP).
Indonesia’s economy slowed to a 2-year low of 5.05 percent, a far cry from its 5.2 percent goal this year, in the second quarter as cooling global growth hampered exports and investment.
“BI will continue its accommodative policy mix,” stressed Perry, adding that such policies could be related to the financial system’s liquidity as well as in the form of a lower benchmark rate.
