- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 5.75%
Bank Indonesia’s Board of Governors on 19 March 2025 left the BI-Rate at 5.75 %, with the Deposit and Lending Facility rates steady at 5.00 % and 6.50 %, judging the stance appropriate to keep inflation in 2025-26 within the 2.5 ± 1 percentage-point target band, preserve rupiah stability amid “persistently high” global uncertainty and support growth. After a 25 bp cut in January, the rate has now been on hold for two consecutive meetings. Implementation will continue to rely on pro-market monetary operations—expanded use of rupiah and FX securities, term repos, FX swaps and secondary-market SBN purchases—while the central bank stands ready to intervene in spot and DNDF markets and has lifted its Macroprudential Liquidity Incentive (KLM) ceiling to 5 % of deposits to spur priority-sector lending. February’s CPI registered 0.09 % y/y deflation, core inflation was 2.48 %, and 2025 growth is projected at 4.7-5.5 % on resilient consumption and 10.3 % y/y loan expansion, underpinned by ample bank liquidity (LA/TPF 26.32 %). External buffers remain solid: February’s trade surplus reached USD3.1 bn and reserves stood at USD154.5 bn (6.6 months of imports), while year-to-date portfolio inflows total USD0.8 bn and the rupiah has appreciated 0.94 % against the USD in March after February’s depreciation. Citing elevated global risks from new US import tariffs and an uncertain Fed rate path, the central bank reiterated its commitment to coordinated policy measures and said it will keep monitoring inflation, growth and currency conditions to assess “further room for monetary easing.”
Rate evolution
From June 2025 to September 2026, Bank Indonesia cut the BI-Rate by 75 basis points from 5.50% to 4.75% between July and September 2025, then held it at 4.75% in October 2025 and for the following six meetings before shifting into tightening, lifting the rate to 5.50% in May 2026 and 5.75% in June 2026. The mid-2025 cuts and the October 2025 pause reflected inflation forecasts for 2025 and 2026 that remained low within the 2.5±1% target, efforts to maintain rupiah stability in the face of still-high global uncertainty, and support for growth as domestic demand and credit remained soft. At the October meeting, Bank Indonesia said it would continue to assess the transmission of the easing already delivered, the growth and inflation outlook, and rupiah stability when considering room for further BI-Rate cuts, while strengthening macroprudential policy to push lending rates lower, raise liquidity and support credit growth.
Through late 2025 and early 2026, the emphasis shifted from room for further easing to external resilience as capital flows turned more volatile, the rupiah weakened and Bank Indonesia pressed banks to pass earlier easing through to lending rates. The policy turn then hardened as turmoil from the Middle East war, higher oil prices, a stronger dollar, high US Treasury yields and foreign exchange pressures prompted Bank Indonesia to prioritise stability, with April signalling readiness to tighten further if needed, May’s increase framed as pre-emptive, and June’s further 25-basis-point increase aimed at strengthening rupiah stabilisation and keeping inflation within the 2.5±1% target in 2026 and 2027. Bank Indonesia held the BI-Rate at 5.75% from July through September as global volatility persisted, with the September decision focused on rupiah stability amid strong external pressures, the inflation target and sustainable growth, while strengthening incentives to attract foreign capital inflows and accelerating money and foreign exchange market deepening.