Indonesia cuts rate by 25 bps to 6¾%; inflation stays under control

By Susanna Moon

Chicago, March 17 – Bank Indonesia said its board of governors decided to lower the BI rate by another 25 basis points to 6¾% at a meeting held Thursday.

The rate cut will provide more room to ease monetary policy and maintain macroeconomic stability, as signs point to less “intense” inflation pressures in 2016 and 2017 and falling uncertainty in the global financial markets, according to a bank announcement.

The move will improve domestic demand to bolster economic growth momentum, amid sluggish growth worldwide, the bank said.

The bank said it will continue to work with the government to control inflation, to support growth stimuli and to ensure that structural reforms remain on track.

The Consumer Price Index recorded deflation of 0.09% month to month in the reporting period.

Inflation remained under control in February, supporting the inflation target of 4% plus or minus 1% in 2016. Core inflation was 0.31% month to month or 3.59% year over year, “in line with anchored inflation expectations and limited domestic demand.”

The deposit facility rate was lowered to 4¾% and the lending facility rate to 7¼%.

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