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Indonesia central bank seen cutting benchmark rate for 5th time this year: poll

Wednesday, July 20, 2016 - 12:48
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Indonesia's central bank is expected to trim its benchmark interest rate again on Thursday, a Reuters poll showed, which would be the fifth cut this year.

[JAKARTA] Indonesia's central bank is expected to trim its benchmark interest rate again on Thursday, a Reuters poll showed, which would be the fifth cut this year.

Eleven of 16 economists surveyed said Bank Indonesia (BI) will cut the benchmark 12-month reference rate by 25 basis points to 6.25 per cent to help spur economic growth.

Most of those who gave a year-end view said a cut on Thursday may be the last one for this year.

Officials at BI have previously said the bank still has room to loosen monetary policy after four cuts, totalling one per centage point, this year. The fourth cut, at the June meeting, surprised the market.

Annual inflation was 3.45 per cent in June, comfortably inside BI's 3-5 per cent target range.

Meanwhile, economic growth could do with more stimulus. The central bank governor has said the annual pace in the second quarter may have not improved much from the disappointing 4.92 per cent in January-March. Second-quarter data will be announced on Aug 5.

BI will switch to a new benchmark, the seven-day reverse repurchase rate, starting in August.

REUTERS