Bank Indonesia makes second surprise rate cut
Consecutive cuts come despite strong second-quarter growth
Indonesia’s central bank surprised observers by cutting its benchmark policy rate by 25 basis points to 5% today (August 20).
Bank Indonesia (BI) said in a statement that the decision was consistent with its “persistently low” inflation forecast for this year and next, and was needed to stimulate the economy. Inflation in Indonesia climbed from 1.9% in June to 2.4% in July, close to BI’s 2.5% target. However, inflation has been subdued for some time now – it was last above 2.5% in June 2024.
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