2019.07.1805:17:00UTC+00Indonesia CB Cuts Interest Rate For First Time In Nearly 2 Years

Indonesia's central bank cut its key interest rate on Thursday, for the first time in nearly two years, joining its peers who have reduced rates ahead of a possible rate cut from the US Federal Reserve.

The Board of Governors, led by Governor Perry Warjiyo, decided to reduce the 7-day reverse repo rate by 25 basis points to 5.75 percent, Bank Indonesia said in a statement. The decision was in line with economists' expectations.

"The policy was pursued in line with the continued low forecast of inflation and the need to push the momentum of economic growth, amid conditions of uncertainty in the declining global financial market and controlled external stability," the bank said.

"Going forward, Bank Indonesia sees open space for accommodative monetary policy in line with the low inflation forecast and the need to push for further economic growth momentum."

The latest reduction was the first since September 2017.

The bank had hiked interest rates by a cumulative 175 basis points in six instances between May and November last year, and thereafter, left them unchanged for seven policy sessions.

In June, the bank cut the reserve requirement for banks by 50 basis points to provide sufficient liquidity in the banking system to support lending to the real economy.

Both the deposit and lending rates were reduced by a quarter-point each to 5 percent and 6.5 percent, respectively.