JAKARTA, Aug 8 (Reuters) – Indonesia’s central bank may be able to cut its benchmark interest rate again if financial markets stabilise, a senior bank official said on Thursday, adding that recent turbulence due to fears of a currency war should be temporary.
“If we look at the turmoil in the past two days, the rupiah is already improving and the financial markets too … If this is maintained, we hope our interest rate can be lowered,” Dody Budi Waluyo, a member of Bank of Indonesia’s board of governors, told Reuters in an interview.
Last month, the bank trimmed its key policy rate by 25 basis points (bps) to 5.75% to support economic growth, the first reduction in nearly two years and ahead of the U.S. Federal Reserve’s July rate cut.
Markets went into a tailspin on Monday after China let its currency weaken beyond 7 yuan per dollar, a surprise move that investors took as retaliation for U.S. President Donald Trump’s announcement of more tariffs on Chinese imports. (Reporting by Gayatri Suroyo and Maikel Jefriando; editing by Darren Schuettler)