- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 4.75%
Bank Indonesia’s Board of Governors on 22 October 2025 kept the BI-Rate at 4.75% together with the Deposit Facility at 3.75% and the Lending Facility at 5.50%, judging that CPI inflation (2.65 % y/y in September, core 2.19 %) will stay within the 2.5 ± 1 % target through 2026, while a steady policy stance supports rupiah stability amid still-elevated global uncertainty and aids economic expansion. Following cumulative 150 bp of rate cuts since September 2024—including a 25 bp reduction in September 2025 that took the BI-Rate to its current record-low level—the central bank is reinforcing its pro-market monetary operations: it is steering money-market and FX-swap rates lower, trimming outstanding Rupiah securities (SRBI), conducting measured secondary-market SBN purchases, widening eligible collateral for repos and preparing BI floating-rate notes and longer-tenor OIS to bolster liquidity and rate transmission. Domestically, Q3 growth was lifted by palm-oil and steel exports ahead of reciprocal US tariff measures, though household demand and credit remain soft; bank lending grew 7.7 % y/y in September despite ample liquidity (AL/DPK 29.29 %) and low gross NPLs of 2.28%. Externally, the balance-of-payments position is resilient: Q3 is expected to show a current-account surplus, reserves stood at USD 148.7 bn (about 6.2 months of imports) and the rupiah firmed to IDR 16,585/USD on 21 October after September weakness, supported by spot, DNDF and offshore NDF intervention. The global outlook remains clouded by broader US tariff actions, though a softer labour market has lowered UST yields and weakened the DXY, increasing expectations of Fed easing and keeping EM flows volatile. Bank Indonesia reiterated it will watch monetary-policy transmission, growth, inflation and rupiah dynamics to “utilise the space for further BI-Rate cuts” while extending macroprudential incentives and payment-system digitalisation to spur credit and sustain growth.
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.