Indonesia c.bank cuts key interest rate after pledge to buy bonds

Credit: REUTERS/STRINGER

Indonesia's central bank cut its benchmark interest rate on Thursday for the fourth time this year after agreeing to expand bond purchases to shore up Southeast Asia's largest economy amid the coronavirus pandemic.

JAKARTA, July 16 (Reuters) - Indonesia's central bank cut its benchmark interest rate on Thursday for the fourth time this year after agreeing to expand bond purchases to shore up Southeast Asia's largest economy amid the coronavirus pandemic.

Bank Indonesia (BI) cut its 7-day reverse repurchase rate IDCBRR=ECI by 25 basis points (bps) to 4.00%, the lowest since at least 2016 when it adopted the rate as its benchmark, and as predicted by a slim majority of respondents in a Reuters poll.

The other two main policy rates, the overnight deposit IDCBID=ECI and lending IDCBIL=ECI rates, were cut by the same amount to 3.25% and 4.75%, respectively.

BI and the government unveiled a $40 billion deficit financing scheme last week, with the central bank pledging to buy $28 billion of bonds while relinquishing interest payments. With Thursday's move, BI has cut rates by a total of 100 bps this year, on top of 100 bps in reductions in 2019.

(Reporting by Gayatri Suroyo, Fransiska Nangoy and Tabita Diela; Editing by Ed Davies and Alex Richardson)

((gayatri.suroyo@thomsonreuters.com; +622129927609; Reuters Messaging: gayatri.suroyo.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More