Indonesia's central bank cut its benchmark interest rate by 25 basis points to 6%
The central Bank of Indonesia announced yesterday that it will cut the benchmark interest rate by 25 basis points to 6 percent, the deposit rate to 5.25 percent, and the lending rate to 6.75 percent.
This is the first time Indonesia has cut interest rates since February 2021. Between August 2022 and April 2024, Bank Indonesia raised its benchmark interest rate by 275 basis points from 3.50% to 6.25%, before leaving it unchanged in May, June, July and August 2024.
Bank Indonesia Governor Peri Wagyo told a news conference that the move was in line with the country's low inflation forecast for 2024 and 2025, with inflation remaining within the 2.5% target range. The policy also aims to support a stronger rupiah and boost economic growth.
He also revealed that the adjustment of the benchmark interest rate from 6.25% to 6% was decided at the Bank Indonesia board meeting held on September 17-18.
Several analysts believe the central bank will keep its benchmark interest rate at 6.25 per cent this month. The cut exceeded market expectations.
The central bank expects Indonesia's economy to grow 4.7% to 5.5% this year. The bank also estimates that the rupiah will continue to strengthen against the dollar going forward. Currently, the Indonesian exchange rate is fluctuating around the Rupiah 15,300 / USD level.