JAKARTA: Indonesia's central bank on Wednesday (July 16) cut key interest rates for the third time this year and left the door open for more as it looks to boost growth in Southeast Asia's largest economy.
Bank Indonesia lowered the seven-day reverse purchase rate by 25 basis points to 5.25 percent. Its two other main rates were lowered by a similar amount.
Governor Perry Warjiyo said officials would "continue to monitor" if more were needed to stimulate growth, while also trying to stabilise inflation and the rupiah currency.
"This decision is consistent with the increasingly lower inflation forecast for 2025 and 2026, the maintained stability of the rupiah exchange rate in line with fundamentals, and the need to continue to boost economic growth," Perry told reporters.
The rupiah was under pressure in the first half of the year, trading near its lowest levels since the Asian financial crisis on the back of US President Donald Trump's sweeping tariffs.
However, Jakarta struck a trade deal Tuesday that will see Washington impose tariffs of 19 percent on Indonesian goods, below the 32 percent previously threatened. US shipments will not be taxed.
Analysts project the rupiah to depreciate against the dollar following the rate cut, and predicted Bank Indonesia would further ease monetary policy.
"We think the currency will lose some ground over the coming months which means that BI will continue to move gradually with monetary easing," said Capital Economics deputy chief emerging markets economist Jason Tuvey.
He forecast another 25-basis-point cut this year. - AFP
