Bank Indonesia Cuts Back Benchmark Rate by 25Bps to Support Growth

By administrator | March 18, 2016 | BI 7-Days Reverse Repo.

Bank Indonesia yesterday cut the benchmark rate by another 25bps for third consecutive months this year. The benchmark rate thus now stood at 6.75% and BI also slashed 25bps on the deposit and lending facility rate to 4.75% and 7.25% respectively. Falling inflation, sluggish domestic growth amidst lesser external pressure were among the key factors pushing the BI to lower the benchmark rate again this month. Last year, the BI was seen cautious to lower the rate as external volatility heightened as reflected by sharp IDR depreciation.

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However, the IDR has been showing strong performance this year as the currency strengthened by 3.09% in February to IDR13,372/USD even it almost touched below IDR13,000 last month.  The IDR strengthening trend was driven by strong foreign inflows on domestic financial market notably bonds market as well as more positive investors perception toward domestic economy following series of policy packages released by the government those aimed to improve the investment climate in the country.

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