Bank Indonesia Expected to Cut Rates to 4.25%



Laila Afifa

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  • Illustration or logo of Bank Indonesia (BI). TEMPO/Imam Sukamto

    Illustration or logo of Bank Indonesia (BI). TEMPO/Imam Sukamto

    TEMPO.CO, Jakarta - Permata Bank economist Josua Pardede predicts Bank Indonesia (BI) will cut the 7-day repo rate or BI7DRR by 25bps to 4.25 percent. The prediction is based on several macroeconomic indicators.  

    "Overall, BI's benchmark interest rate cut is consistent with expectations of inflation and efforts to maintain the rupiah stability," he said on Thursday, June 18.

    One of those macroeconomic indicators, he said, is inflation pressure from weak demand—reflecting a declining purchase power.  

    Meanwhile, Piter Abdullah from the Center of Reform on Economics (Core) said the central bank has room to lower interest rates in a bid to sustain a contracted economy. The space, he said, comes from excessive global liquidity that comes with quantitative easing policies in developed countries.

    Piter also predicts the rupiah to gain as global pressure is diminishing. "Today's global interest rates are very low," he said. 

    Bank Indonesia today will announce its decision for the benchmark rate after June governors' meeting.

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