Indonesia’s central bank cut its main interest rate for the third straight month, taking advantage of a benign inflation outlook and a strengthening currency to deliver a monetary boost to the economy.
Bank Indonesia Governor Agus Martowardojo and his board lowered the reference rate by 25 basis points to 6.75 percent, the bank said yesterday. The monetary authority also cut its lending facility rate and deposit facility rate by 25 basis points each.
With exports falling and commodity prices under pressure, the government has been urging Bank Indonesia to join its regional and global counterparts and add monetary stimulus to Southeast Asia’s largest economy.
The central bank resisted for much of last year, finally pulling the trigger this year after inflation eased into the 3 percent to 5 percent target range and the rupiah staged a rebound against the US dollar.
Indonesian President Joko Widodo is seeking to revive an economy that grew at the slowest pace last year since the end of the global financial crisis in 2009.
In an interview on Feb. 11, he said he wanted interest rates to “fall, fall, fall, fall and keep falling” so that the nation could better compete with its neighbors.
Separately, Norway’s central bank yesterday dropped its key rate by a quarter of a percentage point to a record low of 0.50 percent and indicated that it could cut it further, even into negative territory.
Norges Bank said the latest move was sparked by falling global interest rates, predictions of lower than expected world growth and “somewhat weakened” growth prospects for the Norwegian economy.
Meanwhile, Switzerland’s central bank held interest rates at a record low and repeated its pledge to intervene in currency markets, a threat Swiss National Bank President Thomas Jordan has used to keep the franc from strengthening.
Describing the nation’s currency as “significantly overvalued,” the Swiss National Bank yesterday kept its deposit rate at minus 0.75 percent, while cutting both its growth and inflation forecast for this year and now sees prices dropping 0.8 percent this year.
Additional reporting by AP
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