BI Governor Perry Warjiyo cited stable inflation within the target range, a strengthening rupiah, and the need to boost economic growth as reasons for the rate cut. He maintained the 2024 GDP growth forecast at 5.1 percent and anticipated higher growth in the following year.
Indonesia's inflation rate has remained within BI's target of 1.5-3.5 percent since last year, hitting a 19-month low of 2.12 percent in August. The rupiah has also shown strength, appreciating 7 percent against the U.S. dollar in the third quarter alone, supported by foreign investment in government bonds and a trade surplus.
Gareth Leather, Capital Economics' senior Asia economist, suggested the possibility of further rate cuts, given controlled inflation and the rebounding rupiah. This move positions Indonesia as one of the first Asian economies to shift towards monetary easing, potentially setting a trend for the region.
