Indonesian central bank cuts key rate to 5.5 pct

Indonesian central bank, Bank Indonesia (BI), cut down on Thursday its key interest rate benchmark by 25 basis points (bps) to 5.5 percent from 5.75 percent.

“The rate cut was also expected to push forward the momentums in attaining higher growth so as to avoid from impacts of wavering global economy,” BI Governor Perry Warjiyo said on the sidelines of a governor board meeting.

Indonesia registered 5.05 percent growth in second quarter this year, lower than 5.07 percent in the previous quarter. Domestic consumption, demands and investment remained key elements that spurred Indonesian growth.

Developing situations in global economy were also considered that led BI to cut down the key rate, he said, adding that among them were the growth slowdown in the United States, European countries, Japan and India.

“We must also consider the developing situations in global economy to preserve national economic growth, domestic demands and capital inflow from foreign investors which will eventually support the nation’s resiliency from external pressures,” he added.

Besides the key rate cut, BI governor board meeting also decided to set deposit and lending rate benchmarks at 4.75 and 6.25 percent respectively.