Indonesia’s central bank cuts rate to spur growth

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Indonesia’s central bank unexpectedly cut its key interest rate by 25 basis points on Tuesday (Feb 17) to spur growth as inflation slowed in Southeast Asia’s biggest economy.

It was the first time in three years that the bank had moved to trim the rate, to 7.50 per cent from 7.75 per cent.

The cut effectively cancelled out the quarter-point rate increase in late November. Bank Indonesia said that increase was aimed at stemming inflation, due to a more than 30 per cent increase in subsidised fuel prices.

“The policy is taken because Bank Indonesia is confident that inflation will remain under control,” the central bank said in a statement.

In January, Indonesia’s annual inflation rate was 6.96 per cent. The central bank sees inflation easing to 6.3 per cent in February, and then reach the lower end of its inflation target of 3 to 5 per cent at the end of the year.

Economists said the rate cut was likely made to spur growth, which fell to 5.0 per cent in 2014, the lowest in five years.

“The imports volume was surprisingly low in January, and this means there’s much lower economic activity at the start of this year, and this is probably the concern,” said Bank Central Asia’s chief economist, David Sumual.

New President Joko Widodo has set the growth target for this year at 5.7 per cent.

 

 

Source : Channel News Asia | February 17, 2015

Thomas D’Innocenzi

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About thomasdinnocenzi

Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. http://www.NovaAdvisors.com thomas@NovaAdvisors.com USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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