TEMPO.CO, Jakarta - Bank Indonesia (BI) Governor Perry Warjiyo announced that BI has decided to cut the benchmark interest rate to 5.50 percent. Previously, BI set to maintain the interest rate at 5.75 percent in April 2025.
"At the BI Board of Governors meeting on May 20 and 21, 2025, the decision was made to lower the BI rate by 25 basis points, bringing it to 5.50 percent," Perry said in a press conference on Wednesday, May 21, 2025.
Perry also announced that the deposit facility interest rate decreased by 25 basis points to 4.75 percent from the previous 5.00 percent. Furthermore, the lending facility interest rate decreased by 25 basis points to 6.25 percent from the last 6.50 percent.
Perry stated that this decision aligns with the 2025 and 2026 inflation forecasts, which are controlled within the 2.5 plus or minus 1 percent target. BI estimates that the inflation rate at the end of the year will be 2.6 percent. Additionally, Perry said that the interest rate cut is expected to boost economic growth. Economic growth in the first quarter of 2025 was 4.87 percent. The third reason is that BI sees the rupiah exchange rate as already stable and tends to strengthen.
Previously, the Institute for Economic and Social Research of the Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), advised Bank Indonesia to maintain the benchmark interest rate at 5.75 percent.
"Due to external risks, Bank Indonesia must maintain the BI Rate at 5.75 percent and exercise caution until global conditions become more predictable," economist LPEM FEB UI Teuku Riefky wrote in the Macroeconomic Analysis Series Report released on Tuesday, May 20, 2025.
According to Riefky, recent inflation figures and rupiah stability indicate room for monetary loosening. However, he argued that there is no clarity on whether this stability will be sustained or temporary.
Editor's Choice: Economists Urge Bank Indonesia to Hold Benchmark Rate at 5.75%
Click here to get the latest news updates from Tempo on Google News
Economists Urge Bank Indonesia to Hold Benchmark Rate at 5.75%
6 jam lalu
The Institute for Economic & Social Research has recommended that Bank Indonesia maintain its benchmark interest rate at 5.75 percent.
VP Gibran Acknowledges Backlash Over Soaring QRIS Users
2 hari lalu
Indonesian Vice President Gibran Rakabuming Raka said the rapid development of QRIS users made other parties uneasy
Bank Indonesia Urged to Be Cautious as Foreign Reserves Decline
9 hari lalu
Economists commented on Bank Indonesia's use of its foreign exchange reserves which was deemed excessive compared to some other countries.
Indonesia's Job Availability Index Reflects Employment Challenges, Says Economist
9 hari lalu
Awalil Rizky, an Economist from Bright Institute, mentions a decline in public optimism regarding job availability
Bank Indonesia's Monetary Maneuvers Narrowed as Fed Retains Benchmark Rate
13 hari lalu
The Fed holds interest rates due to increased risks of rising unemployment and inflation. This narrowed down Bank Indonesia's maneuvers.
Bank Indonesia Predicts The Fed Will Hold Interest Rates
13 hari lalu
Bank Indonesia predicts that The Fed will maintain interest rates in the range of 4.25 to 4.5 percent.
Global Institutions Predict Indonesia's 2025 Economic Growth May Fall Below 5%
13 hari lalu
Despite the slowdown, Finance Minister Sri Mulyani expressed optimism that economic growth would still reach 5 percent in 2025.
Bank Indonesia Reports Dismal MSME Credit Growth, Lower Than During Covid-19
13 hari lalu
Bank Indonesia (BI) has highlighted the concerning slowdown in the growth of Micro, Small, and Medium Enterprises (MSME) credit.
CSIS Highlights Indonesia's 'Overcast' Economic Outlook as Growth Drops Below 5%
14 hari lalu
CSIS presents data on the indicators of the current economic downturn. What are they?
Bank Indonesia: 4.87% Growth 'Robust Enough' for Investors
14 hari lalu
Bank Indonesia (BI) stated that foreign capital is starting to re-enter through the auction of securities
