- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 5.75%
Bank Indonesia’s Board of Governors on 23 April 2025 kept the BI-Rate unchanged at 5.75% and maintained the Deposit and Lending Facility rates at 5.00% and 6.50%, judging the stance appropriate to keep headline and core inflation within the 2.5 ± 1 % target for 2025-26, safeguard rupiah stability amid escalating global trade tensions, and support activity as growth is now expected to land just below the midpoint of this year’s 4.7-5.5 % range. After a 25 bp rate cut in January, the policy rate has been on hold for three straight meetings. Operationally, the central bank is reinforcing rupiah stabilisation through spot, DNDF and offshore NDF interventions and secondary-market SBN purchases, while its pro-market SRBI/SVBI/SUVBI instruments and expanded Macroprudential Liquidity Incentive Policy (KLM, raised to up to 5 % of deposits from 1 April) aim to sustain market liquidity and credit transmission. March CPI inflation printed at 1.03 % y/y with core at 2.48 %, and credit growth eased to 9.16 % y/y as banks reported adequate liquidity but pockets of funding pressure. Externally, a USD4.3 bn March trade surplus and USD157.1 bn in FX reserves (6.7 months of imports) underpin a projected 2025 current-account deficit of 0.5-1.3 % of GDP, though April saw USD2.8 bn in portfolio outflows amid risk aversion. The authority highlighted heightened global financial volatility following the US “reciprocal tariff” policy, which is expected to trim 2025 world growth to 2.9 %. Bank Indonesia reiterated readiness to provide “further room for monetary easing” contingent on rupiah developments while continuing to deepen money and FX markets and coordinate with fiscal authorities and the Financial System Stability Committee.
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.