Bank Indonesia cuts BI rate by 50 bps to 7¾%

By Richard Connell

New York, March 4 - The Board of Governors of Bank Indonesia lowered the BI rate by 50 basis points to 7¾% at its meeting on Wednesday, according to a press release issued by the bank.

The board paid particular attention to the global financial crisis, which has continued to affect the economy of Indonesia, reflected in a decline in exports and household consumption.

The board noted that inflation has continued to decrease, falling to 8.6% on a year-to-year basis, caused primarily by reduced fuel and commodity prices.

Forecasting inflation trending toward the lower end of the 5% to7% range, the board voted to cut its interest rate to 7¾% in order to improve banking liquidity.

The board has now cut the BI rate by 175 bps since December.

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