Indonesia Makes Third Rate Cut for 2020 as it Grapples with the Impacts of COVID-19

In efforts to maintain economic stability during the on-going COVID-19 pandemic, Bank Indonesia (BI) announced a 25 basis point (bps) reduction in the benchmark 7-day reverse repurchase rate to 4.25%, marking the third rate cut this year.

In addition, BI also lowered the deposit and lending facility rates by 25 bps each, bringing those rates to 3.5% and 5.0% respectively. Since the start of 2020, BI has cut policy rates by a total of 75 bps in order to stimulate economic activity. This follows a 100 bps policy reduction in 2019.

This reduction comes days after the Government of Indonesia warned of a 3.1% YoY contraction in economic growth for the current April to June 2020 quarter....