Indonesia Cuts Key Rates By 25 Bps

Indonesia's central bank reduced its key interest rates by 25 basis points to underpin economic recovery.

The Board of Governors of Bank Indonesia decided to cut the BI 7-day reverse repo rate to 3.75 percent from 4.00 percent.

The bank has reduced the rate by five times so this year, by a cumulative 125 basis points.

Both the overnight deposit facility rate and the lending facility rate were lowered by 25 basis points each to 3.00 percent and 4.50 percent, respectively.

The central bank said the currency exchange rate strengthened largely reflecting stabilization measures. The bank vowed to strengthen its Rupiah exchange rate stabilization policy in line with its fundamentals.

The bank said the economy expanded in the third quarter driven by stimulus and the relaxation of Covid-19 restriction measures. Economic growth is predicted to pick up in 2021 on the back of the improving global economy and accelerated budget realization.

The bank observed that inflation remained low in line with weak demand and adequate supply.

Bank Indonesia forecasts 2020 inflation to be lower than the lower limit of the inflation target and return to its target of 2.0 to 4 percent in 2021.

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