TEMPO.CO, Jakarta-Bank Indonesia's (BI) board of governors has decided to lower the benchmark interest rate (BI Rate) by 25 basis points from 7.0 percent to 6.75 percent. Deposit facility interest rate is also cut to .75 percent and lending facility is trimmed to 7.25 percent.
The central bank's spokesman Tirta Segara said the decision was made based on the fact that there is room for more monetary policy easing. Macroeconomic conditions are also relatively stable.
"Pressure on inflation and the uncertainty of global financial markets have begun to subside," he said yesterday, March 17.
According to Tirta, a BI Rate cut will strengthen domestic consumption and push economic growth. However, the central bank will be more cautious in determining further loosening monetary policies, taking into account the overall macroeconomic outlooks as well as the stability of the domestic and global financial systems.
Since the beginning of this year, BI had cut its benchmark rates twice. The first was on January 14, cutting 25bps from 7.5% to 7.25%. The central bank lowered the BI Rate by another 25bps on February 18 to 7.0%.
With the latest 25-bps cut to 6.75%, so far into 2016 Bank Indonesia's benchmark interest rates have been lowered by 75bps after remaining unchanged at 7.5% since 2012 to 2015.
ANGELINA ANJAR SAWITRI | ABDUL MALIK