Bank Indonesia may ease monetary policy, Finance Minister says

-A +A

JAKARTA (June 12): Bank Indonesia will likely join other central banks in easing monetary policy to counter a global economic slowdown, Finance Minister Sri Mulyani Indrawati said.

“When the situation has now changed, especially in advanced countries, including about the direction of monetary policies, and there is a signal of the global economy weakening, I think Bank Indonesia will also adjust its monetary policy stance,” Indrawati told reporters in Jakarta on Wednesday. “How will BI do it? We will respect whatever they will do.”

Global central banks are shifting to more looser monetary policy to bolster their economies in the face of a growth slowdown with India, Australia, New Zealand, the Philippines and Malaysia all cutting rates in recent weeks. Bank Indonesia is proceeding more cautiously, keeping interest rates on hold this year after hiking by 175 basis points in 2018 to counter an emerging market rout.

Governor Perry Warjiyo on Monday said the monetary authority will calibrate its policy to support financial stability and boost economic growth. The six rate hikes last year helped to shore up the currency and lure foreign investors back into the nation’s stocks and bonds.

Warjiyo has warned that slower global growth, weaker commodity prices and rising financial market uncertainties could hurt Indonesia’s economy. Growth will probably come in below the midpoint of the central bank’s forecast range of 5%-5.4% this year, he said, adding the nation will need to rely on its domestic consumption and investment to spur growth.

Bank Indonesia is scheduled to announce its rate decision on June 20. PT Bahana Sekuritas is forecasting a 25 basis-point cut at the meeting.