Bank Indonesia cuts rates as economic strains emerge amid ongoing tariff tensions

[JAKARTA] Indonesia’s central bank has lowered interest rates for the second time this year, betting on easing US-China trade tensions and a stable rupiah to help spur domestic economic growth.

Bank Indonesia cut its benchmark interest rate by 25 basis points to 5.5 per cent on Wednesday (May 21), in line with the expectations of 22 out of 35 economists surveyed by Bloomberg.

While the move was broadly anticipated by the market, some analysts argue that there is little justification for BI to ease monetary policy at this point, as the rupiah remains largely unchanged at around 16,400 per US dollar – the same level it held four months ago.