Indonesia Central Bank Cuts Benchmark Interest Rate by 0.25 Percentage Points "Due to COVID-19"

[Asia Economy Reporter Kiho Sung] The Bank of Indonesia (BI) cut the 7-day reverse repurchase agreement rate, used as the benchmark interest rate, by 0.25 percentage points from 5.00% to 4.75% on the 20th.

According to local media, the Bank of Indonesia decided to lower the benchmark interest rate for the first time in four months since last October through a policy meeting.

Bank of Indonesia Governor Perry Warjiyo explained, "Considering the global economic outlook due to the COVID-19 pandemic, we decided to cut the interest rate as a preemptive measure to maintain domestic economic growth momentum."

He added, "The economic growth forecast for 2020 has also been lowered from the initial 5.1?5.5% to 5.0?5.4%, and it is expected to rise again to 5.2?5.6% in 2021."

Governor Warjiyo projected that the economic growth rate in the first quarter of this year will fall below 5% to 4.9%, then rebound.

Indonesia raised its benchmark interest rate six times in 2018, increasing a total of 1.75 percentage points, and lowered it for four consecutive months starting in July 2019, cutting a total of 1.00 percentage point.