Indonesia seen making first rate cut this year soon

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    JAKARTA- Indonesia’s central bank is seen trimming its benchmark rate for the first time this year on Thursday, on top of the five rate cuts it has delivered since the start of the coronavirus pandemic, according to a majority of analysts in a Reuters poll.

    Bank Indonesia (BI) will cut the 7-day reverse repurchase rate by 25 basis points (bps) to 3.50 percent, the lowest since the central bank began using the instrument as its main policy rate in 2016, 21 of 30 analysts in the poll predicted. Nine others expected BI to stand pat.

    Battered by the COVID-19 pandemic, Southeast Asia’s largest economy last year recorded its first full-year gross domestic product contraction since 1998, by 2.1 percent.

    Governor Perry Warjiyo last week told parliament BI had room for further rate cuts, saying the GDP data showed economic recovery has been slower than BI had anticipated and inflation has been below target.