Indonesia Cuts Interest Rates Again to Boost Growth

Bank Indonesia (BI) has reduced its benchmark interest rate by 25 basis points to 5.5%, marking its second cut this year. The move aims to stimulate the economy amid easing global trade tensions and a stable rupiah.

Indonesia trims rates again to boost growth amid global uncertainty.

Mixed Reactions from Analysts

While the cut was expected, some analysts questioned its timing. They argue that the rupiah hasn’t strengthened despite a weaker US dollar, suggesting continued external pressures. Critics caution that BI may be yielding to market pressure rather than economic fundamentals.

Global Uncertainty Remains

Economists note that although US-China trade tensions appear to be easing, unpredictability—particularly around US tariff policy—continues to cloud the global outlook.

Supporting Credit Growth

BI Governor Perry Warjiyo emphasized the need to lower lending rates to spur credit expansion and support growth. He reaffirmed the bank’s focus on keeping inflation in check and ensuring currency stability.

Slowing Growth, Room to Ease

Indonesia’s GDP growth slowed to 4.87% in Q1, prompting BI to lower its full-year forecast to between 4.6% and 5.4%. Inflation remains low at 1.17%, giving the central bank room to maneuver.

Regional Trend in Rate Cuts

Indonesia joins other Southeast Asian nations like Thailand, Singapore, and the Philippines in easing monetary policy to cushion against global headwinds, while Malaysia remains cautious.