Indonesia cuts rate for second month

Bloomberg

Indonesia’s central bank cut its benchmark interest rate for a second straight month and slashed its economic growth forecast, joining global policy makers seeking to shore up their economies amid the
coronavirus crisis.
Bank Indonesia lowered the seven-day reverse repurchase rate by 25 basis points to 4.50%, in line with the forecasts of 14 of 26 economists surveyed by Bloomberg. Three predicted a 50 basis-point move and the rest saw no change.
The virus is expected to further weaken Southeast Asia’s biggest economy, with Bank Indonesia now projecting annual growth of 4.2%-4.6% for this year, down from a previous estimate of 5%-5.4%, Governor Perry Warjiyo said. The lower end of projection would be the slowest expansion since 2003.
The yield on Indonesia’s 10-year government bonds rose 10 basis point after the decision while the rupiah continued its tumble against the dollar, reaching its lowest point since 1998.
The cut comes after a spate of central banks, including the US Federal Reserve, slashed rates amid deepening economic fallout from the virus. The Reserve Bank of Australia lowered its benchmark rate by 25 basis points at an emergency meeting, reaching the limits of conventional policy. The Philippines also slashed its key rate by 50 basis points, the largest cut since it adopted its current interest-rate framework in 2016.
Cases of Covid-19, the disease caused by the virus, have soared in Indonesia in recent days, accompanied by a spike in deaths. The deteriorating situation has raised concerns about spiraling risks for the economy, which was already hurting amid a slump in tourism and trade,
and which now faces possible
lock-downs that could further
reduce consumer demand.
The latest bout of easing comes after last month’s cut and four reductions last year. The government has announced plans to inject stimulus — unveiling three emergency packages in the past few weeks, including as much as $1.8 billion in measures on March 18.