Indonesia Cuts Interest Rate to Boost Economy

Indonesia’s central bank has cut its benchmark interest rate to 7.25% from 7.5% in an attempt to give its struggling economy a boost.

It is the first time that the bank has cut interest rates since February last year.

Low inflation and weak fourth quarter economic growth numbers were some of the reasons cited for the cut.

The bank’s decision was announced as deadly bombs and gunfire attacks rocked the country’s capital, Jakarta.

Earlier this week, analysts were divided on whether or not Bank Indonesia (BI) would make a move. The country has been been facing its slowest pace of growth since 2009 and a weakening currency.

However, they said the bank had clearly given priority to boosting the economy over worries that a looser policy would push the currency down further.

The rupiah depreciated by some 10% in 2015 and has since fallen a further 0.7% this year.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza