Indonesia cuts benchmark rate for third month in row

Therefore when the aforementioned troubles (inflation, rupiah and current account deficit) started to become under control, Indonesian political leaders (most notably Indonesian President Joko Widodo and Vice President Jusuf Kalla) as well as the business community immediately requested the central bank to lower interest rates in order to create room for credit growth and accelerated economic expansion.

Differing from the downward trend forecasted by the Worldbank and International Monetary Fund, which are both foreign institutions, Bank Indonesia shared on Thursday (17/3) that the country's economic growth in 2016 will reach an estimated 5.2-5.6 percent.

Indonesia cut its interest rates for the third time this year in a bid to boost economic growth, local media reported Thursday.

Eight out of 13 economists polled by The Wall Street Journal had expected the bank to cut its benchmark rate by 0.25 percentage points. The bank left rates virtually unchanged in 2015, reluctant to make a move amid high inflation.

As such, the lower interest rate environment is not only evidence that Indonesia's monetary authorities see a stable financial condition but it also provides room for accelerated economic growth. BI said it expects the Fed to wait until the second half and then raise U.S. rates twice. Federal Reserve officials said Wednesday they wouldn't likely raise interest rates as swiftly as previously expected.

JAKARTA, March 18 Indonesia's central bank governor said the government has to address some fiscal concerns which have been a key aspect in constraining a rating agency from upgrading the country's credit rating to investment grade.

The central bank has also been closely monitoring the near-term risk of a further devaluation in the Chinese yuan, though the likelihood of this has diminished since People's Bank of China Gov. Zhou Xiaochuan said last month there was no basis for further yuan depreciation.

A woman walks past Bank Indonesia (BI). The central bank expected Indonesia's economic to grow 5.1 percent this year, better than last year's 4.79 percent. Supported by rising realization of government spending (particularly on infrastructure), this year's GDP growth target should be achieved.

Source: Indonesia cuts benchmark rate for third month in row