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Indonesia’s central bank cut rates unexpectedly, sparking concerns over political influence and currency stability.
Indonesia’s central bank shocked markets with an unexpected interest rate cut, fueling concerns about political interference under President Prabowo Subianto as he pushes for higher growth.
The move, unanticipated by economists, comes amid protests, the abrupt dismissal of Finance Minister Sri Mulyani, and a weakening rupiah that hit a record low of 16,970 per dollar in 2025.
Despite stable macroeconomic fundamentals, investors worry that repeated rate cuts to boost growth could undermine currency stability.
The central bank has cut rates by 150 basis points in the past year, with more easing expected as the Federal Reserve signals rate cuts.
However, fears are rising over proposed legislative changes that could expand the central bank’s mandate and allow parliamentary removal of its governor, raising questions about independence.
Analysts warn that political pressure and unclear communication may force tough trade-offs between growth and currency stability, deepening market skepticism.
El banco central de Indonesia recortó las tasas inesperadamente, lo que generó preocupaciones sobre la influencia política y la estabilidad monetaria.