Bank Indonesia Governor: Interest rate cuts aimed at stimulating demand for loans

Dhwani Mehta FXStreet

After surprising the markets with a 25bps rate cut, the Bank Indonesia’s Governor continues to speak at the presser, with the further comments found below.

Policy rate decision is consistent with low inflation outlook.

Decision also to support GDP growth, cushion economy from global economic slowdown.

Looking forward, central bank to continue with "accommodative policy mix".

Consideration for rate cut also includes attractiveness of Indonesian assets for foreign investors.

We have to take preemptive move to anticipate global economic slowdown.

Interest rate cuts aimed at stimulating demand for loans.

To continue to explore macroprudential tools that can be loosened.

Inflation seen around 3% in 2020.

Aggregate demand is seen below aggregate supply in next 2 years.

Baseline for latest decision is for no more us interest rate cut this year.

Markets see possible more interest rate cuts by the US Fed.

Will remain in the market for Rupiah stabilization.

The USD/IDR pair is seen resuming its recent declines, having failed to sustain the bounce around 14,240 region to now retest the three-day lows of 14,225 as BI rate cuts are done for this year.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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