Indonesia: Bank Indonesia surprises with second rate cut in two months

  • Indonesia’s central bank announced a surprise cut to its policy rate on 22 Aug 19, citing the need to move the economy after slowest growth in two years.
  • Bank Indonesia cut its benchmark seven-day reverse repo rate by 25 basis points to 5.5%, the second rate cut in two consecutive months — after slashing it for the first time in nearly two years in Jul 19.
  • Governor Perry Warjiyo had earlier said room for policy rate cuts remain open until the end of 2019.
  • Still, Bank Indonesia’s decision had been unexpected, due to renewed concerns from trade tensions. U.S. President Donald Trump’s announcement of new tariffs on China has weighed down on the rupiah.

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