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View all search resultsBI cuts benchmark rate by 25 bps as stars align
The central bank views the deal Jakarta made with Washington as bringing “a positive result” overall, be it in terms of economic growth, trade balance or its impact to the financial market.
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Bank Indonesia (BI) Governor Perry Warjiyo talks during a livestreamed press briefing after the monthly Board of Governors meeting in June. (Courtesy of Bank Indonesia (BI)/-)
B
ank Indonesia (BI) has decided to cut its key interest rate by 25 basis points (bps) to boost gross domestic product (GDP) growth as all the other pieces have come together for monetary policy easing despite global volatility.
Following the central bank’s two-day monthly policy meeting, BI Governor Perry Warjiyo announced in an online press conference on Wednesday that the key interest rate, the BI Rate, was cut down to 5.25 percent.
“This decision is consistent with the even lower inflation projection for 2025 and 2026 […], the maintained rupiah exchange rate stability in accordance with its fundamentals and the need to keep pushing economic growth,” BI Governor Perry Warjiyo said, revealing that all the key conditions had been met to justify a rate cut.
After reaching the peak of its recent monetary tightening cycle at 6.25 percent in April last year, BI has subsequently brought its rate down by one percentage point through four 25 bps cuts starting in September, followed by three more in this year’s January, May and July.
Perry said BI will closely watch for further rate cuts, the timing and magnitude of which “will be adjusted to the dynamics of global and domestic economy”.
The monetary authority projected Indonesia’s full-year 2025 GDP growth to fall between 4.6 to 5.4 percent year-on-year (yoy). It forecast better performance in the second half since the figure played out disappointingly in the first quarter with mere 4.87 percent yoy, with most expecting the second quarter to not veer far higher, if not lower.
Inflation, on the other hand, has been sitting well within BI’s target range between 1.5 percent and 3.5 percent since 2024 and even dipped below the floor in the first three months of this year but bounced back to 1.95 percent in April.
