We predict that BI will lower its benchmark interest rate by 25 basis points to 6.25 percent ..."Jakarta (ANTARA News) - JPMorgan Chase economist Sin Beng Ong has forecast that Bank Indonesia (BI) would slash its benchmark interest rate by 25 basis points to 6.25 percent.
"We predict that BI will lower its benchmark interest rate by 25 basis points to 6.25 percent during the meeting of the Board of Governors on March 17," Ong noted in a press statement received here on Friday.
The BIs Board of Governors agreed on February 17-18, 2016, to lower the BI Rate by 25 basis points to seven percent, with the Deposit Facility Rate and Lending Facility Rate staying at five percent and 7.5 percent, respectively.
The BI has also decided to lower the reserve requirement ratio (GWM) to 6.5 percent from 7.5 percent, effective March 16.
The decision was in line with the monetary easing arising due to solid macroeconomic stability, a decrease in the inflationary pressure in 2016, and the reduced global uncertainty.
The reduction of the BI Rate is expected to boost economic growth.
"After lowering the BI Rate, we also expect that the central bank would hold it at 6.75 percent," Ong remarked.
Earlier, the government had supported BIs decision to reduce its benchmark interest rate following the global downward trend.
"We support BIs decision to bring down its benchmark interest rate," Coordinating Minister for Economic Affairs Darmin Nasution stated here on Tuesday.
The minister remarked that as a result of this adjustment, the interest rate will no longer be a handicap for the people.
"The government has urged the state-owned banks and the Ministry of Finance to avoid increasing the interest rate," the minister pointed out.
The minister noted that the lower interest rates could boost the economic sectors, particularly the manufacturing sector.
(Uu.A063/INE/KR-BSR/A014)
Editor: Priyambodo RH
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