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Indonesia cuts interest rates to help economic growth

January 14, 2016

HONG KONG (AP) — Indonesia’s central bank cut its benchmark interest rate on Thursday for the first time in nearly a year to help shore up the weak economy, which has decelerated to its slowest pace since 2009.

Bank Indonesia said it was cutting its BI rate by a quarter point to 7.25 percent.

The decision was made at the bank’s monthly policy meeting, held on the same day that attackers set off explosions in downtown Jakarta and waged gunbattles with police, leaving at least seven people dead.

The rate had been unchanged at 7.5 percent since last February, when it was cut by a quarter point from 7.75 percent.

The bank said it moved to cut rates because fourth quarter economic growth did not show significant improvement while inflation remained low and within the target range set by the bank as commodity prices continued to weaken.

Bank Indonesia said last month that it expects the Southeast Asian nation to have posted economic growth of 4.8 percent in 2015, which is near the bottom of its target range and would be the worst performance since 2009. For 2016, growth is expected to pick up to 5.2-5.6 percent.