Indonesia's central bank announces surprise rate cut
JAKARTA : Indonesia's central bank unexpectedly announced a cut in its key interest rate today in a bid to boost economic growth just days after President Prabowo Subianto touted an expectation-defying economy.
Bank Indonesia lowered the benchmark seven-day reverse repurchase rate by 25 basis points to 5%, citing a need to bolster stability and growth.
'This decision is consistent with the continued low inflation forecast for 2025 and 2026… the maintained stability of the rupiah, and the need to promote economic growth in line with the economy's capacity,' said Bank Indonesia governor Perry Warjiyo.
'The low inflation will give room for more interest rate cuts,' he said.
It was the fifth cut since September, despite economist predictions the central bank would hold this time around, and the lowest rate since late 2022.
It comes after Indonesia recorded positive second quarter (Q2) economic results of more than 5% growth after Prabowo's government set an ambitious goal of 8% when he took office last year.
He lauded the figure in his first state of the nation speech last week.
Bank Indonesia had projected at the start of the year that economic growth would be slower in 2025 compared to last year.
London-based business research centre, Capital Economics, called the move a surprise but said more rate cuts could be expected.
'With inflation subdued and GDP growth likely to slow, we think there's scope for more easing over the rest of this year,' wrote Capital Economics' Jason Tuvey in a note.
'We now expect rates to be lowered to 4.50% by year-end,' Tuvey added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Free Malaysia Today
7 hours ago
- Free Malaysia Today
Indonesia's central bank announces surprise rate cut
Bank Indonesia had projected at the start of the year that economic growth would be slower in 2025. (Reuters pic) JAKARTA : Indonesia's central bank unexpectedly announced a cut in its key interest rate today in a bid to boost economic growth just days after President Prabowo Subianto touted an expectation-defying economy. Bank Indonesia lowered the benchmark seven-day reverse repurchase rate by 25 basis points to 5%, citing a need to bolster stability and growth. 'This decision is consistent with the continued low inflation forecast for 2025 and 2026… the maintained stability of the rupiah, and the need to promote economic growth in line with the economy's capacity,' said Bank Indonesia governor Perry Warjiyo. 'The low inflation will give room for more interest rate cuts,' he said. It was the fifth cut since September, despite economist predictions the central bank would hold this time around, and the lowest rate since late 2022. It comes after Indonesia recorded positive second quarter (Q2) economic results of more than 5% growth after Prabowo's government set an ambitious goal of 8% when he took office last year. He lauded the figure in his first state of the nation speech last week. Bank Indonesia had projected at the start of the year that economic growth would be slower in 2025 compared to last year. London-based business research centre, Capital Economics, called the move a surprise but said more rate cuts could be expected. 'With inflation subdued and GDP growth likely to slow, we think there's scope for more easing over the rest of this year,' wrote Capital Economics' Jason Tuvey in a note. 'We now expect rates to be lowered to 4.50% by year-end,' Tuvey added.
Malay Mail
8 hours ago
- Malay Mail
Indonesia central bank surprises markets with 5pc rate cut to spur growth
JAKARTA, Aug 20 — Indonesia's central bank unexpectedly announced a cut in its key interest rate on Wednesday in a bid to boost economic growth just days after President Prabowo Subianto touted an expectation-defying economy. Bank Indonesia lowered the benchmark seven-day reverse repurchase rate by 25 basis points to 5 per cent, citing a need to bolster stability and growth. 'This decision is consistent with the continued low inflation forecast for 2025 and 2026... the maintained stability of the rupiah, and the need to promote economic growth in line with the economy's capacity,' said Bank Indonesia governor Perry Warjiyo. 'The low inflation will give room for more interest rate cuts.' It was the fifth cut since September, despite economist predictions the central bank would hold this time around, and the lowest rate since late 2022. It comes after Indonesia recorded positive second-quarter economic results of more than five per cent growth after Prabowo's government set an ambitious goal of eight per cent when he took office last year. He lauded the figure in his first state of the nation speech last week. Bank Indonesia had projected at the start of the year that economic growth would be slower in 2025 compared to last year. London-based business research centre, Capital Economics, called the move a surprise but said more rate cuts could be expected. 'With inflation subdued and GDP growth likely to slow, we think there's scope for more easing over the rest of this year,' wrote Capital Economics' Jason Tuvey in a note. 'We now expect rates to be lowered to 4.50 per cent by year-end.' — AFP
Malay Mail
9 hours ago
- Malay Mail
Bursa Malaysia trims losses, ends slightly lower amid cautious trade
KUALA LUMPUR, Aug 20 — Bursa Malaysia pared most of its earlier losses to close marginally lower as profit-taking was offset by selective buying in heavyweights, amid cautious sentiment in regional markets, a dealer said. At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) slipped 2.03 points, or 0.13 per cent, to close at 1,588.21 from Tuesday's close of 1,590.24. The benchmark index opened 2.21 points lower at 1,588.03, and moved between 1,583.40 and 1,591.04 throughout the day. The broader market was negative with decliners outpacing advancers 647 to 376, while 487 counters were unchanged, 1,084 untraded and 16 suspended. Turnover narrowed to 2.55 billion units worth RM2.50 billion from 2.60 billion units worth RM2.74 billion on Tuesday. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan said that the broader market sentiment today remained guarded ahead of policy signals from the US Federal Reserve's Jackson Hole Economic Policy Symposium later this week. 'Sector rotation was evident, with industrials outperforming on the back of a double-digit rally in petrochemicals, while plantations and consumer cyclicals also showed strength - underscoring resilient domestic demand amid external policy uncertainty,' he told Bernama. Meanwhile, Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng viewed today's profit-taking as a healthy correction as it allows the market to digest the recent strong uptrend. 'The FBM KLCI is holding well above the key 1,585 support mark, which sets the stage for further gains. Barring any external shocks, we expect the benchmark index to trade within the 1,570 to 1,600 range throughout the week,' he said. Among the heavyweights, Maybank and Public Bank were flat at RM9.80 and RM4.46, respectively, Tenaga Nsaional declined 6.0 sen to RM13.66, CIMB fell 3.0 sen to RM7.36, while IHH Healthcare rose 3.0 sen to RM6.88. Of the most active counters, Vantris Energy eased half-a-sen to 3.5 sen, Sime Darby trimmed 1.0 sen to RM1.75, while Zetrix AI added 1.0 sen to 87.5 and Tanco was flat at 73 sen. Across the broader market, the FBM Emas Index decreased 29.58 points to 11,782.83, the FBMT 100 Index shed 29.35 points to 11,568.30, the FBM Emas Shariah Index gave up 32.06 points to 11,699.34, the FBM 70 Index dropped 106.51 points to 16,603.46, while the FBM ACE Index slipped 13.77 points to 4,695.92. By sector, the Financial Services Index slid 20.36 points to 18,165.14, the Plantation Index garnered 46.12 points to 7,592.60, the Industrial Products and Services Index perked up 1.61 points to 160.73, and the Energy Index eased 0.93 of-a-point to 749.29. The Main Market volume dipped to 1.46 billion units valued at RM2.28 billion from Tuesday's 1.49 billion units valued at RM2.51 billion. Warrants turnover improved to 780.41 million units worth RM93.66 million from 732.43 million units worth RM101.91 million previously. The ACE Market volume declined to 310.20 million units worth RM124.67 million from 375.68 million units worth RM134.87 million yesterday. Consumer products and services counters accounted for 247.19 million shares traded on the Main Market; industrial products and services (235.22 million), construction (146.13 million), technology (189.98 million), financial services (82.44 million), property (176.76 million), plantation (25.02 million), REITs (21.21 million), closed-end fund (3,000), energy (186.91 million), healthcare (32.64 million), telecommunications and media (47.13 million), transportation and logistics (34.33 million), utilities (38.49 million), and business trusts (11,600). — Bernama
