BI Signals Further Rate Cut Possible as Growth Becomes Priority
Main Takeaways
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JAKARTA, investortrust.id — Bank Indonesia Governor Perry Warjiyo has signaled the possibility of another interest rate cut in the second half of 2025, as the central bank aims to further support economic growth.
Speaking during a working meeting with the House of Representatives’ Budget Committee (Banggar) on Thursday, July 4, Warjiyo said that despite already cutting its benchmark rate twice this year—by 25 basis points each—Bank Indonesia (BI) still has room to ease further due to low inflationary pressures.
“We still have room to cut the BI Rate, supported by low inflation. This is one of our tools to help boost economic growth,” Warjiyo told lawmakers during the hearing on Indonesia’s 2026 macroeconomic assumptions.
BI last reduced the benchmark interest rate to 5.50% in May 2025, after keeping it steady at 5.75% from January through April. In its June policy meeting, BI opted to hold the rate steady, citing a need to maintain external stability.
Stabilizing the Rupiah
Warjiyo emphasized that monetary policy will continue to focus on maintaining exchange rate stability. The central bank is actively intervening in the foreign exchange market through various instruments, including offshore and domestic non-delivery forwards (NDF), spot transactions, and other targeted tools.
“We are intervening through offshore NDF, domestic NDF, and spot markets to ensure rupiah stability,” he said.
Secondary Bond Market Support
In a further effort to maintain financial market liquidity and support fiscal stability, BI has also ramped up its purchases of government bonds on the secondary market. According to Warjiyo, as of June 26, the central bank had purchased Rp132.9 trillion ($8.1 billion) worth of sovereign bonds.
“This figure doesn’t yet include planned debt-switching programs. These efforts are part of our strategy to support liquidity expansion and maintain exchange rate stability amid global spillovers,” Warjiyo said.
He noted that the central bank’s support through bond purchases also aligns with President Prabowo Subianto’s macroeconomic goals by bolstering fiscal policy and sustaining economic momentum.