Bank Indonesia governor Perry Warjiyo. (Antara Photo/Sigid Kurniawan)

Bank Indonesia Signals Further Rate Cuts This Year

JULY 22, 2019

Jakarta. The governor of Bank Indonesia, Perry Warjiyo, has given a signal that the central bank may lower its benchmark interest rate again this year to boost the country's economic growth.

Speaking in front of lawmakers during a session at the House of Representatives in Jakarta on Monday, Perry said the room for monetary policy easing remains open as long as inflation stays manageable.

"There will be room for monetary easing [policy], whether it is to boost liquidity or to make further cuts in the benchmark interest rate," Perry said, as quoted by Antaranews.com.

The bank cut its benchmark interest rate by 25 basis points to 5.75 percent last Thursday in anticipation of expected policy easing by the United States and other developed countries.

This was the central bank's first cut in nine months as it strives to balance interest rate level that can support a faster economic growth amid uncertainty in the global economy.

Perry also said some of Indonesia's economic indicators, including results of business as well as banking surveys, showed an improvement in activity since the third quarter last year.

He said economic growth is expected to improve in the second half of this year as long as inflation stays tame. The rupiah, meanwhile, is likely to strengthen.

The head of the Finance Ministry's fiscal unit, Suahasil Nazara, told Antara he expected the latest central bank rate cut would trigger more investment to flow into the country as the cost of borrowing by banks is now more likely to fall.

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