Bank Indonesia cuts policy rate by 25 bps to 6.00
BI decision comes hours before anticipated Fed rate cut
Rate cut to support growth, governor says

JAKARTA, Sept 18 Reuters Indonesia39;s central bank delivered its first rate cut in more than three years on Wednesday, just hours ahead of the widely expected start of the U.S. Federal Reserve39;s easing cycle in efforts to bolster growth in Southeast Asia39;s largest economy.

Bank Indonesia BI unexpectedly trimmed the benchmark rate by 25 basis points to 6.00, its first rate cut since February 2021. Only three out of 33 economists polled by Reuters had predicted the move, while the rest expected no change.

The decision is consistent with BI39;s expectation inflation will remain low in 2024 and 2025, and the rupiah staying stable, BI governor Perry Warjiyo said. It also aligns with BI39;s efforts to bolster economic growth, he added.

A clearer direction on monetary policy moves by the Fed, a bigger drop in U.S. Treasury yields and tendency for the dollar to ease have given BI the window for the rate cut, he said.

These three factors were very different from last month…so we did not have to wait for the Fed funds rate decision, Warjiyo said.

The time is right, he said.

BI will continue to assess room for further easing, the governor said.

BI39;s monetary policy stance is now a balance between stability and growth, Warjiyo said, switching from its previous prostability stance.

The rupiah had been under pressure…