Indonesia Makes Fourth Rate Cut Amid US Tariff Risk

Bank Indonesia has reduced its benchmark interest rate by 25 basis points to 5.25%, marking the fourth cut since September, as it seeks to support economic growth amid global trade tensions and weak domestic demand. The move was expected by a narrow majority of economists and follows June's inflation reading of 1.87%, comfortably within the central bank's target. This rate cut comes as uncertainty persists after US President Trump announced a new 19% tariff on Indonesian goods, with ongoing trade negotiations offering the potential for some relief. The central bank also lowered its overnight deposit and lending facility rates to 4.50% and 6.00%, respectively. Bank Indonesia suggested that further rate cuts are possible, contingent on global markets and rupiah stability. Economic growth for 2025 is now forecast between 4.6% and 5.4%, buoyed by improved exports and supportive government policies.