Indonesia’s central bank surprised markets on wednesday with another interest rate cut, trimming its benchmark by 25 basis points to 4.75%. It was the sixth reduction since september last year, as policymakers push to boost growth while managing concerns about fiscal stability and central bank independence.
Governor perry warjiyo said bank indonesia remains focused on supporting domestic demand, with liquidity described as ample despite weak credit uptake. The decision follows criticism from the new finance minister over limited lending, and comes alongside a government $1 billion stimulus plan.
The rupiah firmed slightly and the jakarta stock market hit a record high after the announcement. Analysts expect more cuts ahead but warn that political pressure and uncertainty over the bank’s independence could unsettle investor confidence if growth-supportive measures overshadow financial stability.
