BI Cut The Benchmark Rate to 6.50% and the BI 7-Day (Reverse) Repo Rate at 5.25%

Economic Research	17 June 2016
Indonesia
Economic Highlights
BI Cut The Benchmark Rate to 6.50% and the BI 7-Day (Reverse) Repo Rate at 5.25% Bank Indonesia (BI) board of governors’ meeting decided to cut the BI rate to 6.50% on 16th June 2016. Similarly, the lending and deposit facility rates were also cut to 7.00% and 4.50% respectively. In addition, BI announced that the BI-7 Day (Reverse) Repo rate, which will become the benchmark rate effective on 19 August 2016, would be cut as well to 5.25%. The decision was made given that inflation is moderating, while current account deficit and currency are relatively stable. Furthermore, the BI was taking a window of opportunity to ease policy, as expectations on the US Fed to raise interest rates are abating. BI perceives there is a need for additional easing to stimulate domestic demand and catalyse credit growth on both the supply and demand sides in order to bolster future economic growth. Economist:  Rizki Fajar| +6221 29707065
To access our recent reports please click on the links below: 16 Jun: Both Exports and Imports Improve 08 Jun: 2016 State Budget Draft Revison: Tax Amnesty To The Rescue 01 Jun: Inflation Continues to Moderate in May 01 Jun: Slower Money Supply and Loan Growth 20 May: BI Held The Benchmark Rate at 6.75% and the BI 7-Day (Reverse) Repo Rate at 5.5% 22 Apr: Higher Infrastructure Spending: Where Does The Money Come From?