Indonesia’s central bank cuts benchmark rate by 25 basis points to 5.25%

[JAKARTA] Indonesia’s central bank cut its benchmark interest rate for the third time this year, shortly after the country finalised a trade deal with the US that sets a 19 per cent tariff on goods from South-east Asia’s largest economy.

Bank Indonesia (BI) on Wednesday (Jul 16) lowered its benchmark rate by 25 basis points to 5.25 per cent, aligning with market consensus compiled by Reuters. It also reduced its overnight deposit and lending facility rates to 4.5 per cent and 6 per cent, respectively.

BI governor Perry Warjiyo said the decision was driven by low inflation – which remained within the target range – and the continued stability of the rupiah, in line with its fundamentals as well as the ongoing need to support economic growth. Inflation in June stayed near the bottom of the central bank’s target range of 1.5 to 3.5 per cent.