BREAKING NEWS: Bank Indonesia further cuts BI rate by 25 basis points to 6.75%

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Tirta Segara

JAKARTA (TheInsiderStories) – Bank Indonesia (BI) has decided to cut its benchmark interest rate, BI Rate, by 25 basis points to 6.75 percent, the third rate cut in 2016, Head of Communication Department of Bank Indonesia Tirta Segara said, announcing the results of Bank Indonesia’s two-days board meeting.

The decision to cut BI rate was possible amid stability of macro economic, easing domestic inflationary pressure and easing volatility of global financial market.

He said domestic economic indicators show positive trend, such as trade surplus in February, strengthening of rupiah and an increase of foreign exchange reserves.

The strengthening of rupiah was partly due to inflow of foreign funds as well as improved investors sentiment on Indonesian economy following the issuance of government economic policy packages.

The central bank’s decision to further cut BI rate confirmed BI’s continued move to ease monetary policy. “The next focus is how this easing monetary policy is translated into easing overall banking industry’s interest rate and improve availability of loans,” he said.

“Therefore, the growth momentum which has started in the fourth quarter last year will continue in first quarter this year,” he said.

Bank Indonesia expects GDP growth in the first quarter to be slightly higher at above 5.1 percent compared to 5.01 percent in fourth quarter of 2015.

“The central bank said as global economic growth remains slow, reduction of BI rate is expected to increase domestic demand and stimulate economic growth and at the same time maintaining macro economic stability,” it said in a statement.

In order to assure that the transmission of monetary policy is effective, the short-term focus going forward is strengthening the operational framework through implementation of monetary operation.

The central bank will also coordinate with the government to ensure inflation remains under control and strengthen growth stimulus and continue structural reform,therefore supports sustainable economic growth of Indonesia. (*)

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Source: The Insiderstories
BREAKING NEWS: Bank Indonesia further cuts BI rate by 25 basis points to 6.75%

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