Bank Indonesia Cuts Benchmark Rate to 5.25%, Perry Warjiyo Cites Room to Spur Growth
Main Takeaways
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JAKARTA, Investortrust.id — Bank Indonesia has lowered its benchmark interest rate by 25 basis points to 5.25%, in a move Governor Perry Warjiyo says is aimed at supporting domestic economic growth as inflation eases and the rupiah holds steady.
The rate cut was decided at the central bank’s Board of Governors Meeting held on Tuesday and Wednesday, July 15–16, 2025. It marks the second reduction this year and signals a shift toward more accommodative monetary policy in the second half of 2025.
Three Reasons Behind the Cut
Governor Perry outlined three key reasons for the decision. First, inflation is trending lower and is projected to remain well within Bank Indonesia’s target range over the next two years.
“In fact, core inflation is expected to remain below the 2.5% midpoint of our target,” Perry said in a virtual press conference on Wednesday, July 16.
Second, Perry noted that the rupiah exchange rate has been relatively stable, with prospects for continued strength supported by solid macroeconomic fundamentals.
Third, the governor emphasized the need for monetary policy to align with broader efforts from the government, banking sector, and businesses to stimulate economic activity and improve public welfare.
Potential for Further Cuts
Perry signaled that further rate reductions remain on the table for the remainder of the year.
“With inflation falling even below the midpoint of our target, a stable exchange rate, and the need to push growth, we see room for another rate cut. The timing and magnitude will depend on global and domestic economic dynamics,” he said.
Deposit and Lending Facility Rates Also Lowered
Alongside the benchmark rate cut, BI also trimmed the Deposit Facility rate by 25 basis points to 4.50% and the Lending Facility rate to 6.00%. The last rate cut occurred in May 2025, when the BI Rate was lowered to 5.50% from 5.75%.
From January through April this year, the BI Rate had held steady at 5.75%.