Indonesia central bank makes 3rd rate cut since July, by 25 bps to 5.25%

Posted by on 20 September 2019


KONTAN.CO.ID - JAKARTA. Indonesia's central bank on Thursday cut its benchmark interest rate for the third time in three months, as expected, as it tries to lift sluggish economic growth.

Bank Indonesia (BI) trimmed the 7-day reverse repurchase rate by 25 basis points (bps) to 5.25%, bringing the total reduction in the key rate to 75 bps this year. In a Reuters poll, 13 of 21 economists predicted Thursday's cut. The rest predicted a hold.

The trim was approved at a scheduled policy meeting that ended shortly after the Federal Reserve cut rates by 25 bps in the United States.

BI's two other main rates for overnight deposit and lending facilities were also trimmed by 25 bps, to 4.50% and 6.00%, respectively.

BI raised rates six times by 175 bps last year to support the rupiah and halt capital outflows linked to U.S. monetary tightening and the U.S.-China trade war. It began the current easing cycle in July.