BI Holds Benchmark Rate at 5.75%, Net Capital Inflow Reaches $1.5 Billion
JAKARTA, investortrust.id – Bank Indonesia’s Board of Governors Meeting, held on February 18-19, 2025, decided to maintain the benchmark interest rate, BI Rate, at 5.75%. The central bank also opted to keep the deposit facility rate at 5% and the lending facility rate at 6.5%. Meanwhile, foreign portfolio investments recorded a net capital inflow of $1.5 billion year to date as of February 17, 2025.
Governor of Bank Indonesia Perry Warjiyo stated that there is room for a potential rate cut, considering Indonesia's low inflation and the government's aim to sustain strong economic growth.
"This decision was made against the backdrop of an anticipated 3.2% global economic growth in 2025. However, uncertainty in global financial markets remains high, influenced by the United States' broader and faster-than-expected tariff adjustments and the Federal Reserve’s monetary policy direction," Perry said at the announcement of the central bank’s policy decision in Jakarta on Wednesday, Feb. 19, 2025.
Perry was accompanied by Bank Indonesia’s Senior Deputy Governor Destry Damayanti, along with Deputy Governors Doni P. Joewono, Juda Agung, Aida S. Budiman, and Filianingsih Hendarta.
Foreign Capital Inflows Boost Foreign Reserves
Despite global financial market uncertainty, Indonesia saw a net foreign capital inflow of $1.5 billion into portfolio investments through mid-Q1 2025, primarily driven by inflows into government bonds (SBN), which accounted for $0.5 billion.
These inflows have contributed to Indonesia's robust foreign exchange reserves, which stood at $156.1 billion as of January 2025, providing ample liquidity to support external stability.
January Rate Decision and Inflation Trends
Bank Indonesia had previously cut the benchmark rate by 25 basis points to 5.75% during its January 14-15, 2025 meeting. At that time, Perry explained that the decision was based on a comprehensive assessment of global and domestic economic projections. Along with the policy rate cut, the central bank also lowered the deposit facility rate by 25 basis points to 5% and the lending facility rate to 6.5%.
Meanwhile, Indonesia recorded a monthly deflation of 0.76% in January 2025, reversing the 0.44% inflation observed in December 2024. Acting Head of Statistics Indonesia (BPS) Amalia Adininggar Widyasanti stated that the Consumer Price Index (CPI) declined from 106.8 in December 2024 to 105.99 in January 2025.
"The deflation in January 2025 contrasts with the previous month and the same period in 2024, which recorded inflation. The monthly and calendar-year deflation both stood at 0.76% due to the same comparison period—December 2024," Amalia explained in Jakarta on Monday, Feb. 3, 2025.