Indonesia Central Bank Slashes Key Rate For Third Time This Year

Indonesia Central Bank Slashes Key Rate For Third Time This Year

17 March 2016, 14:50
Roberto Jacobs
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Indonesia Central Bank Slashes Key Rate For Third Time This Year

Indonesia's central bank cut its interest rates for a third time this year and said there was more room for easing amid easing inflationary pressures and less global uncertainty.

The Board of Governors of Bank Indonesia, led by Governor Agus Martowardojo, slashed its key interest rate by a quarter-point to 6.75 percent on Thursday.

The latest decision was in line with economists' expectations. The latest round of policy easing began in January, when poicymakers had cut the rate by the same size, marking the first reduction in 11 months. The move was repeated in February.

The bank also cut the lending facility rate and deposit facility rate, known as FASBI, by the same amount to 7.25 percent and 4.75 percent, respectively.

"The move is consistent with greater room to ease monetary policy along with a solid macroeconomic stability, specifically indicated by the persistently less intense inflationary pressures in 2016 and 2017, while uncertainties in the global financial market decreased," the bank said.

"Amid a sluggish global economic growth, the lower BI Rate is expected to enhance domestic demand to bolster economic growth momentum, while maintaining macroeconomic stability."


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