Jakarta. Bank Indonesia (BI) has cut its benchmark interest rate by 25 basis points to 6 percent, following a review of inflation forecasts and the strengthening rupiah.

The central bank also lowered the deposit facility rate to 5.25 percent and the lending facility rate to 6.75 percent during its meeting on September 17-18, 2024.

BI Governor Perry Warjiyo stated that this move aligns with the low inflation forecast for 2024 and 2025, which remains within the target range of 2.5 percent. The policy also aims to support the strengthening of the rupiah and boost national economic growth.

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"Looking ahead, BI will continue to monitor the potential for further rate cuts, considering the stable and appreciating rupiah, low inflation, and the need to drive higher economic growth," said Perry Warjiyo during a press conference on Wednesday.

BI will continue to reinforce its policy mix, including monetary, macroprudential, and payment systems, to maintain stability and support sustainable economic growth. Perry highlighted that the loose macroprudential policy will encourage bank credit financing in key sectors that promote growth and job creation, particularly for SMEs and the green economy, while adhering to prudent principles.

Prior to the meeting, Danamon Bank economist Hosianna Evalita Situmorang and Bank Permata's Chief Economist Josua Pardede had predicted that BI would maintain the benchmark interest rate in September, citing the stable rupiah and controlled inflation. They said, however, that BI may consider rate cuts later in 2024.

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