BI further cuts BI rate by 25 bps to 6.50%

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Photo BI

JAKARTA (TheInsiderStories) – Bank Indonesia on Thursday (June 16) decided to further cut benchmark BI Rate by 25 basis points to 6.50 percent, the fourth cut so far this year, BI announced.

BI cut the benchmark rate by 25 basis points in January, February and March respectively from 7.50 percent December 2015, and kept it in April and May.

Director for Communication of Bank Indonesia Tirta Segara said the decision to ease benchmark rate was necessary in order to boost banks credit and spur economic growth.

“For this reason, BI decides to cut BI rate by 25 basis points to 6.5 percent,” he said.

The central bank also cut overnight deposit facility rate (Fasbi) by 25 basis points to 4.50 percent and Lending Facility rate by 25 bps to 7.0 percent, while 7 days repo rate also cut by 25 bps to 5.25 percent.

Director Executive for Monetary and Economic Policies at BI Juda Agung said the other reason BI cuts the BI rate as inflation is expected to be less than 4 percent this year, current account deficit will be around 2.2 percent of GDP and the rupiah is strengthening. Meanwhile, economic growth is steady.

Harry Su, an analyst with Bahana Securities, said early this week that the central bank still has room to further cut BI rate by 50 basis points this year.
He said given that the rupiah is still relative stable and inflation is under control, now is the right time for the central bank to ease monetary policy, therefore help boost the country’s economic growth.
“We see it (BI rate) can still decline by 50 basis points to 6.25 percent,” he said. (*)

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Source: The Insiderstories
BI further cuts BI rate by 25 bps to 6.50%

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