the Indonesian Central Bank lowered its key interest rate and lowered its growth forecast for the largest economy in Southeast Asia against the background of the pandemic coronavirus.
Bank Indonesia on Thursday reduced the rate of 7-day reverse REPO by 25 basis points to 4.5%. This second easing of monetary rates this year after four declines in the aggregate of 100 basis points in the past year.
the regulator’s Decision coincided with the forecast, 14 of 26 economists surveyed by Bloomberg. Three experts predicted a decline of 50 basis points, the other expected conservation rate at the same level.
the growth of the economy in 2020 is likely to be slower than expected in the range of 4.2-4.6 percent, compared with a February forecast of 5-5,4%, said the head of Bank Indonesia Perry Warjiyo. The new forecast assumes minimal growth since 2005.
According to Warjiyo, the regulator has the opportunity for a more significant reduction in rates, given low inflation and a fed rate cut USA 100 basis points. The Central Bank decided to lower the rate only by 25 bps, to keep an attractive premium on Indonesian assets.
last week, the authorities have prepared a stimulus package in the amount of 120 trillion rupees ($8.1 billion) to support the economy in a pandemic COVID-19.