Bank Indonesia cuts benchmark rate to 7%

JAKARTA. Bank Indonesia (BI) reduced its benchmark interest rate by 25 basis point (bps) on Thursday to 7 percent following a two-day board of governors meeting.

The central bank also lowered the primary reserve requirement ratio by 100 bps to 6.5 percent, down from 7.5 percent, effective from March 16. This is the second time the central bank has cut 25 bps of its key rate in two consecutive months, after it remained for almost a year at 7.5 percent.

Bank Indonesia governor Agus Martowardojo said that the bank central also lowered both the deposit and lending facilities by 25 bps to 5 percent and 7.5 percent, respectively.

"The decision is expected to spur ongoing economic growth," Agus said at a press conference in Jakarta.

Agus said the cuts to the key rate and the primary reserve requirement ratio were in line with a broader opening of monetary policy, allowing some more space due to macroeconomic stability and maintained inflation. (Ayomi Amindoni)