Indonesia Resumes Rate Cuts Amid Growing Concerns Over Virus
- Key rate cut by 25bps as predicted by most economists
- Bank revises down 2020 economic growth forecast to 5%-5.4%
Indonesia’s central bank cut its benchmark interest rate after a three-month pause, and lowered the growth forecast as the spread of the coronavirus threatens the outlook for Southeast Asia’s biggest economy.
Bank Indonesia lowered the seven-day reverse repurchase rate by 25 basis points to 4.75% Thursday, joining a string of other central banks around the region that have eased policy in recent weeks to counter the impact of the virus. Nineteen of the 31 economists in a Bloomberg survey predicted the central bank’s move while the rest saw no change.
Indonesia is yet to record a single case of the deadly virus but officials have become increasingly worried about a slump in trade and tourism after China shut factories to contain the outbreak and both countries restricted travel. Bank Indonesia’s resumption in rate cuts after four reductions last year comes on top of a fiscal boost from the government to cushion the economy, which was already slowing last year because of the U.S.-China trade war.