JAKARTA. Bank Indonesia's decision to cut its benchmark interest rate to 5.75% on Wednesday (15/1) today came as a surprise to market participants. 

‘This is the right time to lower interest rates so that we can create a better growth story,’ BI Governor Perry Warjiyo said after announcing the cut.

Radhika Rao, DBS Economist, said this decision shows BI's shift in focus towards domestic economic growth. However, this decision is different from BI's previous plan, which was to be more careful in maintaining the rupiah exchange rate.

Nonetheless, Lloyd added, the gradual increase in tariffs by the Trump Administration could potentially help the rupiah, but in a limited way. (KR/LM)