After pressure on the rupiah subsided, Indonesia’s central bank resumed its monetary easing program to boost the faltering economy by lowering its benchmark interest rate on Wednesday, as the market had anticipated.
As anticipated by 20 of the 32 analysts surveyed by Reuters, Bank Indonesia (BI) reduced the benchmark 7-day reverse repurchase rate, also referred to as the BI Rate, by 25 basis points to 5.50 percent. The same amount also lowered two additional policy rates.
At a news conference in Jakarta, Governor Perry Warjiyo stated, “This decision is consistent with the forecast of low and manageable inflation in 2025 and 2026 within target to maintain the stability of the rupiah under its fundamentals and to contribute to economic growth.
According to him, policies that encourage exports and household demand must be implemented, and growth must be bolstered to lessen the effects of US tariffs. The largest economy in Southeast Asia expanded at its slowest rate in over three years in the first quarter, with an annual growth rate of 4.87 percent.
Compared to its earlier growth projection of 4.7% to 5.5%, BI marginally reduced it to a range of 4.6% to 5.4% for this year. President Prabowo Subianto promised to raise growth to 8% by the end of his term in 2029, but the administration has set a growth target of 5.2% this year.
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