situation report

Indonesia: Central Bank Lowers Interest Rate to 5.5 Percent

1 MIN READAug 22, 2019 | 16:26 GMT

What Happened: Indonesia has cut interest rates for a second time in the past two months, lowering its seven-day repurchase rate by 25 basis points to 5.5 percent, Bloomberg reported Aug. 22.

Why It Matters: Indonesia's gross domestic product growth recently hit a two-year low, while its economy is facing increasing headwinds from the U.S.-China trade war and low global commodity prices. Economists are expecting Jakarta to continuing lowering interest rates to hedge against future downside risks, although additional cuts could limit Indonesia's ability to manage its weak currency.

Background: Indonesia's economy grew by 5.1 percent in the second quarter, but President Joko "Jokowi" Widodo is planning to boost GDP growth to 5.3 percent in 2020.

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