Basudiwa Supraja, Erfan Maruf, Jakarta – Chief Economic Affairs Minister Airlangga Hartarto said Wednesday that Bank Indonesia's decision to cut the key interest rate to 5.75 percent could boost the people's purchasing power.

Earlier that day, the central bank announced that it had lowered its benchmark interest rate by 25 basis points to 5.75 percent in a move to keep inflation within the target range of 1.5 to 3.5 percent. This also marks the first interest rate cut in four months. The deposit facility rate was also cut down to 5 percent. Bank Indonesia also lowered the lending facility rate to 6.5 percent.

"Anything that can suppress high prices will bolster people's purchasing power," Airlangga said at the BNI Investor Daily Roundtable forum in Jakarta.

The senior minister remains upbeat about Indonesia's economic outlook. Estimates by international institutions show that the Indonesian economy can grow 5.2 percent in 2025, according to Airlangga.

"The International Monetary Fund, World Bank, and even the OECD [Organization for Cooperation and Development] have a positive outlook for Indonesia. They are confident that we can achieve a 5.2 percent growth this year," Airlangga said.

Indonesia will also try to boost its investment inflows and exports to catapult growth. To this end, Indonesia will try to move its commodities up the value chain. By refining the commodities domestically, Indonesia will be able to bring greater added value to the economy.

"Some of our key commodities include steel, palm oil, and coal. Moving forward, we really have to push for this downstream industry development.... We also have to look for sources of foreign exchange and pursue import substitution," Airlangga said.

Source: https://jakartaglobe.id/business/key-interest-rate-cut-to-boost-purchasing-power-ministe