Hanoi (VNA) – Indonesia’s central bank (Bank Indonesia) on August 22 unexpectedly cut its policy interest rate to 4.5 percent from 4.75 percent as the Southeast Asia’s biggest economy is seeking to boost economic growth. 

Cutting the interest rate will strengthen the stability of the financial system and support the higher economic growth, according to Bank Indonesia governor Agus Martowardojo.

In the second quarter of this year, Indonesia’s economy grew 5.01 percent, unchanged from the previous quarter, but below the government target of 5.2 percent growth for 2017.

The country’s inflation is projected to be at 3.5 percent in 2018, lower than this year’s prediction of 4.3 percent.  The exchange rate between Indonesian Rupiah (IDR) and US dollar for next year is predicted at 13,500 IDR per USD, compared to this year’s rate of 13,400 IDR/USD.

According to the Indonesia Central Bureau of Statistics, the foreign direct investment (FDI) into the country increased 10.6 percent to 109 trillion IDR (8.2 billion USD) in the second quarter of this year. Improvement of the investment environment is the first priority of the President Widodo administration in order to achieve the 7-percent growth. -VNA