- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 4.75%
Bank Indonesia’s Board of Governors on 17 December 2025 left the BI-Rate unchanged at 4.75% and maintained the Deposit and Lending Facility rates at 3.75% and 5.50% respectively, judging the current stance appropriate to safeguard rupiah stability amid elevated global uncertainty while reinforcing the transmission of earlier monetary and macro-prudential easing to support domestic demand. After trimming the policy rate by a cumulative 150 bp since September 2024—including 125 bp earlier in 2025—the central bank has held it steady since September. Operationally, BI will continue “pro-market” open-market interventions, optimise issuance of Bank Indonesia Rupiah Securities (SRBI), conduct measured secondary-market SBN purchases, and remunerate banks’ excess reserves 25 bp below the Deposit Facility rate (3.50%) to spur credit and liquidity. November consumer price inflation eased to 2.72 % y/y (core 2.36 %), comfortably inside the 2.5 ± 1 % target band, while GDP is projected at 4.7–5.5 % in 2025 and 4.9–5.7 % in 2026; bank lending rose 7.74 % y/y in November but transmission to loan rates remains slow, prompting an expansion of the performance-linked Macroprudential Liquidity Incentive (KLM) scheme, now offering incentives up to 5.5 % of deposits. Externally, the rupiah traded at IDR 16,685 per USD on 16 December, supported by BI’s multi-pronged FX interventions and USD5 bn of Q4 portfolio inflows; foreign reserves climbed to USD 150.1 bn (6.2 months of imports) and the 2025 current-account balance is seen between a 0.1 % surplus and a 0.7 % deficit of GDP. BI noted global growth is set to soften to 3.0 % in 2026 after an estimated 3.2 % in 2025, while the recent 25 bp Fed Funds Rate cut has not eliminated market volatility. Looking ahead, the central bank will “continue to assess room for further BI-Rate reductions” as long as 2026 inflation stays within target and rupiah stability is preserved.
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.