Bank Indonesia Cuts Benchmark Interest Rate to 4.75%; Rupiah Weakens
In February 2020 all eyes were on the novel coronavirus outbreak and its impact on the global financial markets. Especially when the new virus spread across European countries toward the end of the month, market participants started selling their assets, causing huge sell-offs around the globe.
The central bank of Indonesia (Bank Indonesia) decided to cut its benchmark interest rate by 25 basis points (bps) – from 5.00 percent to 4.75 percent – at the monetary policy meeting that was held on 19 and 20 February 2020. It was the first time in four months that Bank Indonesia cut its key rate. It also lowered the deposit facility rate by 25 bps to 4.00 percent and the lending facility rate by 25 bps to 5.5 percent.
Meanwhile, the Indonesian rupiah had finished the month of January 2020 at the level of IDR 13,662 per US dollar. However, it ended the following month at IDR 14,234 per USD, implying a 4.19 percent decline against the greenback in February 2020.
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