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Indonesia rate cut depends on timing, says Deputy Governor

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Global central banks are shifting to looser monetary policy to bolster their economies in the face of a growth slowdown.

Sunday 09, June 2019

(Bloomberg) – The Deputy Governor of Bank said that the central bank is discussing the possibility of cutting interest rates but is waiting for the right time to do so,

Dody Waluyo, the Deputy Governor of Bank Indonesia, said that given the uncertainty in financial markets, the central bank needs to be cautious and a rate cut will depend on the timing.

Policy makers are monitoring the economic data closely to assess when they can move, Waluyo said.

“We are calculating from time to time the possibility to cut rates, hopefully we will do it later on,” added Waluyo.

Last week, the Reserve Bank of India (RBI) cut its benchmark rate for a third time, while Australia, New Zealand as well as the Philippines and Malaysia have also eased in recent weeks.

Indonesia’s policy makers are treading more carefully to avoid undermining the currency. Bank Indonesia raised interest rates six times last year to bolster the rupiah after it came under attack during an emerging-market rout.

The central bank deputy governor said that the policy rate is determined not only by how we are able to address the inflation rate within our target, but also how we address the stability of the rupiah and the factors behind the rupiah mostly come from the external side.

Governor Perry Warjiyo hinted at rate cuts at last month’s policy meeting, saying the central bank will consider whether there is room to ease, while remaining vigilant of global market risks and maintaining external stability.

Waluyo added that the policy rate is only one of the tools available to support the economy, and the central bank will also use macroprudential measures and liquidity instruments as it did last year.

TAGS : Bank Indonesia, Reserve Bank of India, rate cut, Dody Waluyo, Perry Warjiyo, policy rate, financial markets

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