An Unexpected Rate Cut

Last Friday, when attention turned to the potential eruption of Mount Agung in Bali, Bank Indonesia (BI) decided to cut its reference rate by 25 basis points. Now BI's 7-day Repo rate is at 4.25 percent. The move surprised the market, because BI had made a similar cut a month ago.

Market players expected the benchmark interest rate to be held at 4.5 percent, given the Federal Reserve's (US central bank) plan to raise its interest rate later this ye

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