BI cuts rates despite rupiah weakness
Economists had expected no rate change
BI Governor says time right to support growth

JAKARTA, Jan 15 Reuters Indonesia39;s central bank unexpectedly cut policy rates on Wednesday, resuming its monetary easing aimed at propping up growth in Southeast Asia39;s largest economy despite financial market volatility that has weakened the currency.

Bank Indonesia BI cut the benchmark 7day reverse repurchase rate by 25 basis points to 5.75, its first cut since September.

All 30 economists polled by Reuters had expected no change in rates, citing the pressure on the rupiah.

The bank also trimmed its deposit facility rate and lending facility rate by 25 basis points each to 5.00 and 6.50, respectively.

This is the timing to lower rates so we can create a better growth story, BI Governor Perry Warjiyo said after announcing the surprise cut. He said the decision was in line with expectations of low inflation in 2025 and 2026. Going forward, BI will continue to direct monetary policy to maintain inflation within its target and the exchange rate in line with fundamentals, while still observing the space to help drive economic growth, Warjiyo said.

BI on Wednesday said economic growth in 2024 may come in slightly below the midpoint of its forecast range of 4.75.5. BI also lowered its growth outlook for 2025 to 4.75.5 from a previous estimate of 4.85.6.

The central bank had cut interest rates for the first time in more than three years in…