Indonesia major bank seen cutting benchmark rate

On Thursday, Indonesia’s major bank is expected to cut its benchmark interest rate as a Reuters survey showed. It’s going to be the fifth rate drop this year.     

11 of 16 financial experts surveyed told that Bank Indonesia is going to drop the benchmark 12-month reference rate by approximately 25 basis points to 6.25% to help to drive economic growth.

The vast majority of those who gave a year-end view told that a cut on Thursday might appear to be the last one for this year.

Officials of Indonesia’s bank have previously told that the major financial institution still boasts room to loosen its current monetary policy after four rate dips, this year totaling one percentage point.  The fourth drop, which took place at the June gathering, shocked the market.

Annual inflation appeared to be 3.45% in June, fitting inside BI's 3-5% target range.

Meanwhile, economic growth might require extra stimulus. The major bank governor has informed that the annual pace in the second quarter might not have improved a lot from the gloomy 4.92% in January-March. 

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