* BI cut benchmark 25 bps to 4.75 pct
* C.bank has cut key rate 6 times, by 150 bps, in 2016
* Loan growth slowing, August lowest since Nov 2009
By Nilufar Rizki and Gayatri Suroyo
JAKARTA, Oct 20 (Reuters) - Indonesia's central bank surprised the market on Thursday by cutting its benchmark interest for a sixth time this year, renewing efforts to spur sluggish lending and growth.
Bank Indonesia (BI) cut the 7-day reverse repurchase rate by 25 basis points to 4.75 percent.
"In the midst of a weak global economy, we believe this monetary easing will strengthen efforts to push domestic demand, including for credits, so that it could support the momentum for economic growth," BI said.
Thirteen of 17 economists in a Reuters poll had expected the benchmark
IDCBRR=ECI
to be kept at 5.00 percent on Thursday.
The central bank made six cuts to its benchmark this year by a total of 150 basis points.
In August, it switched its benchmark from the 12-month reference rate to the 7-day reverse repurchase rate to try to more directly affect market rates.
The economy gained some momentum in the second quarter, with good crops higher government spending helping push annual growth to 5.2 percent.
But the central bank said state spending cuts, sluggish bank lending, and weak global trade probably weakened third quarter growth to around 5 percent. BI's outlook for 2016 is between 4.9-5.3 percent.
So far, BI's 2016 rate cuts have had limited impact on commercial banks' lending. In August, it grew just 6.83 percent from a year earlier, the weakest since November 2009.
Indonesia is due to announce third quarter growth early next month.
In September, Indonesia's annual inflation rate was near the lower end of BI's target band, at 3.07 percent. The rupiah
IDR=
has been stable, trading near 13,000 a dollar since July. The third quarter's current account deficit is expected to stay at a comfortable level.
Ng Weiwan, economist at ANZ said real interest rates in Indonesia "remain elevated despite the rate cuts this year"
"Credit growth will be constrained with the overhang from the non-performing loan and the deposit rate caps limiting the interest that banks can pay for deposits," Ng added.
(Additional reporting by Hidayat Setiaji; Editing by Richard Borsuk) ((gayatri.suroyo@thomsonreuters.com; +622129927609; Reuters Messaging: gayatri.suroyo.thomsonreuters.com@reuters.net))
* C.bank has cut key rate 6 times, by 150 bps, in 2016
* Loan growth slowing, August lowest since Nov 2009
By Nilufar Rizki and Gayatri Suroyo
JAKARTA, Oct 20 (Reuters) - Indonesia's central bank surprised the market on Thursday by cutting its benchmark interest for a sixth time this year, renewing efforts to spur sluggish lending and growth.
Bank Indonesia (BI) cut the 7-day reverse repurchase rate by 25 basis points to 4.75 percent.
"In the midst of a weak global economy, we believe this monetary easing will strengthen efforts to push domestic demand, including for credits, so that it could support the momentum for economic growth," BI said.
Thirteen of 17 economists in a Reuters poll had expected the benchmark
The central bank made six cuts to its benchmark this year by a total of 150 basis points.
In August, it switched its benchmark from the 12-month reference rate to the 7-day reverse repurchase rate to try to more directly affect market rates.
The economy gained some momentum in the second quarter, with good crops higher government spending helping push annual growth to 5.2 percent.
But the central bank said state spending cuts, sluggish bank lending, and weak global trade probably weakened third quarter growth to around 5 percent. BI's outlook for 2016 is between 4.9-5.3 percent.
So far, BI's 2016 rate cuts have had limited impact on commercial banks' lending. In August, it grew just 6.83 percent from a year earlier, the weakest since November 2009.
Indonesia is due to announce third quarter growth early next month.
In September, Indonesia's annual inflation rate was near the lower end of BI's target band, at 3.07 percent. The rupiah
Ng Weiwan, economist at ANZ said real interest rates in Indonesia "remain elevated despite the rate cuts this year"
"Credit growth will be constrained with the overhang from the non-performing loan and the deposit rate caps limiting the interest that banks can pay for deposits," Ng added.
(Additional reporting by Hidayat Setiaji; Editing by Richard Borsuk) ((gayatri.suroyo@thomsonreuters.com; +622129927609; Reuters Messaging: gayatri.suroyo.thomsonreuters.com@reuters.net))
