Bank Indonesia cut rate again to 4.25%

BANK INDONESIA / BI - Bank Indonesia cut benchmark rate, seven-day reverse repurchase (repo) rate by 25 basis points (bps) to 4.25% on Friday (22/9). 

The BI Board of Governors by the result of the policy meeting on September 20 and 22, 2017 also lowering the Deposit and Lending Facility rates 25 bps to 3.5% and 5%. 

"The decision was consistent with the rooms for monetary policy easing, low inflation in 2017, also 2018 and 2019 inflation projected within the target range," said Dody Budi Waluyo, Executive Director for Monetary and Economic Policy of Bank Indonesia on Friday (9/22).

Dody mentioned that the developments in global economic continues. Consumption activities and declining uncertainity in financial sector in US and Europe are inline with the domestic demand. 

China's economy is also expected to grow better supported by strong consumption and lending activities. "This can compensate for India's economic downturn," he added.

External risks relating to the Fed hiking its rate and unwinding its balance sheet is expected by the market and Bank Indonesia.

Last month, BI agreed to cut its benchmark by 25 bps to 4.5%, after maintaining 4.75% rate in ten month in a row.