situation report

Jul 18, 2019 | 15:27 GMT

1 min read

Indonesia, South Korea: Central Banks Reduce Interest Rates

What Happened: Central banks in South Korea and Indonesia have cut their benchmark interest rates by 25 basis points to 1.5 percent and 5.75 percent, respectively, Reuters reported July 18.

Why It Matters: South Korea had not cut interest rates in three years, whereas the reductions are the first in two years for Indonesia's central bank. Both decisions reflect a growing need for monetary easing to boost economic growth amid continued weakness and hedge against an anticipated rate cut by the U.S. Federal Reserve.

Background: Although South Korea's interest cut was considered a surprise, it comes as the country's economy is facing increasing uncertainty from global trade tensions and a slowdown in technology industries. Indonesia's rate reduction came after the country's central bank hiked interest rates six times in 2018.

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