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[Interest Rate Cut Surpasses Expectations! Bank Indonesia Vows to Stimulate Economy] ⑴ Although all 31 economists surveyed had predicted Bank Indonesia would keep interest rates unchanged, the bank unexpectedly announced a 25 basis point cut to its benchmark rate on Wednesday, bringing it to 4.75%. ⑵ Following the rate decision, the rupiah fell 0.5% against the US dollar, but the Indonesian stock index hit a record high due to a positive growth outlook. ⑶ This rate cut marks the 150th basis point reduction by Bank Indonesia since the start of its easing cycle in September 2024. The bank has also supported the economy through liquidity easing and government bond purchases. ⑷ Following this rate cut, 12 economists predicted further rate cuts from Bank Indonesia, with the median forecast for a 4% rate in 2026. A larger consensus of 21 economists had previously predicted a final rate of 4.50%. ⑸ JPMorgan Chase lowered its forecast for Bank Indonesia's benchmark rate in 2026 to 3.50%, while Barclays expects the rate to fall to 4.25% this year and believes further rate cuts are possible. (6) The Governor of Bank Indonesia stated that commercial bank interest rates need to be lowered "immediately," and that the central bank will continue to seek room for further rate cuts. He emphasized that the central bank will work with the government to support economic growth. (7) In addition, Bank Indonesia implemented an asymmetric rate cut, lowering the deposit facility rate by 50 basis points to 3.75% and the lending facility rate by 25 basis points to 5.50%. This is the first time since 2016 that an "asymmetric corridor" has been used to manage money market interest rates. (8) One analyst believes that this move may be related to the government's policy of transferring over $12 billion in funds from the central bank to state-owned banks to increase liquidity in the banking system.