Indonesia Announces Surprise Rate To Offset Tepid Global Growth

Indonesia's central bank announced a surprise interest rate cut Thursday as it looks to offset tepid global growth, after Southeast Asia's biggest economy posted its slowest quarterly expansion in two years

Jakarta, (APP - UrduPoint / Pakistan Point News - 22nd Aug, 2019 ):Indonesia's central bank announced a surprise interest rate cut Thursday as it looks to offset tepid global growth, after Southeast Asia's biggest economy posted its slowest quarterly expansion in two years.

Bank Indonesia (BI) trimmed its key lending rate by 25 basis points to 5.5 percent -- the second rate reduction in as many months -- and signalled more cuts could be in store.

"This is a pre-emptive measure to boost momentum," said bank governor Perry Warjiyo.

"Indonesia is fortunate that its economy continues to expand, but we must anticipate the risks of a slowdown in the global economy.

" Indonesia has been grappling with weaker prices for key commodities like coal and palm oil, as the world economy falters on the back of the US-China trade war.

Some analysts had expected the bank to hold off cutting borrowing costs again over concerns about weakening in the rupiah currency.

"Today's rate cut came as a surprise," Franziska Palmas of research house Capital Economics said in a report.

"The slowing economy and subdued inflation mean BI would certainly like to cut rates again in the coming months."But "further loosening is likely to be gradual", Palmas added.