Indonesia Cuts Main Interest Rate by 25bps

Bank Indonesia surprisingly lowered its benchmark interest rate by 25 bps to 7.5 percent in February in order to boost growth and bring inflation back to target. It is the first rate cut since 2011.

The overnight deposit facility rate – Fasbi - was also lowered by 25 bps to 5.50 percent while the lending facility rate was left on hold at 8 percent.

The central bank now targets inflation between 3 and 5 percent in 2015. Consumer prices slowed to 6.96 percent in January, from a 12-month high of 8.36 percent in December.

In 2014, Indonesia's economic growth was the lowest in five years hurt by a slowdown in private and public spending and lower exports. And in January 2015, the country posted the highest trade surplus in ten months as imports declined much faster than imports.

Indonesia Cuts Main Interest Rate by 25bps

Joana Taborda |
2/17/2015 12:33:20 PM