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View all search resultsBI keeps benchmark interest rate unchanged despite Fed cut
Bank Indonesia has kept the BI Rate unchanged in its final policy meeting of 2025 after having cut the benchmark interest rate five times throughout the year.
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Bank Indonesia's (BI) Board of Governors members pose for a photo on Dec. 18, 2024, before a monthly press conference held at the central bank's Jakarta headquarters. (JP/Deni Ghifari)
B
ank Indonesia has kept its benchmark interest rate unchanged despite a reduction in the federal funds rate (FFR) by the United States Federal Reserve earlier this month.
Following the central bank’s two-day monthly policy meeting, BI Governor Perry Warjiyo announced in a press conference on Wednesday that the BI Rate remained at 4.75 percent, the lowest level since late 2022.
“This decision is consistent with the endeavor to maintain the rupiah exchange rate amid high global uncertainty,” said Perry, adding that the central bank would focus on interest rate transmission, or the passing through of benchmark rate reductions to market rates, to support economic activity.
BI has brought its benchmark interest rate down by a total of 1.25 percentage points through five cuts this year, but the reduction in interest rates charged by commercial banks on borrowers has been lagging.
Perry revealed that the average loan rate has only gone down by 24 basis points (bps), from 9.2 percent at the start of the year to 8.96 percent in November.
High financing costs have contributed to sluggish loan growth, with bank loan issuance up just 7.7 percent year-on-year (yoy) in November, though that marks an uptick from 7.4 percent a month prior.
Credit demand was also muted because many businesses were maintaining a wait-and-see stance and maximizing internal financing, said Perry.
