should be room to cut rates, awaiting stronger rupiah By Reuters

© Reuters. FILE PHOTO: Bank Indonesia’s logo is seen at Bank Indonesia headquarters in Jakarta, Indonesia, September 2, 2020. REUTERS/Ajeng Dinar Ulfiana/File Photo

PADALARANG, Indonesia (Reuters) – Indonesia’s central bank has room to lower interest rates this year to lift economic growth but is waiting for the rupiah to strengthen against the dollar, Governor Perry Warjiyo said on Saturday.

“If we rush while the global condition is in disequilibrium, the rupiah could weaken and inflation goes out of control,” he told a media gathering. He said global economic fragmentation caused the disequilibrium.

Bank Indonesia raised its key policy rate by 250 bps from August to October to 6% to ensure rupiah stability and keep inflation under control.

Warjiyo also said Southeast Asia’s largest economy is in an upward cycle of growth, which he expected to peak in 2026.

BI expects the economy to grow between 4.7% and 5.5% this year, compared with last year’s 4.5%-5.3% outlook.

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