Bank Indonesia Cuts Benchmark Rate to 5.0%
Main Takeaways
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JAKARTA, Investortrust.id — Bank Indonesia has cut its benchmark interest rate by 25 basis points to 5.0% after a two-day Board of Governors meeting concluded on Wednesday, Aug 20, 2025. The central bank said the move reflected stable inflation and a resilient rupiah exchange rate, while aiming to stimulate sustainable economic growth.
Governor Bank Indonesia Perry Warjiyo announced the decision in an online press conference, emphasizing that the rate adjustment was made in light of the country’s economic outlook and manageable risks.
“Based on our assessment of prospects and risks ahead, the Board of Governors meeting on Aug 19–20, 2025, decided to lower the BI Rate by 25 basis points to 5.0%,” Perry said.
Alongside the main policy rate, the central bank also reduced its Deposit Facility rate by 25 basis points to 4.25% and its Lending Facility rate by the same margin to 5.75%.
Inflation Outlook and Currency Stability
Perry explained that the decision aligned with projections showing inflation in both 2025 and 2026 would remain low and within the target band of 2.5% plus or minus 1%. He added that Bank Indonesia remained focused on maintaining rupiah stability in line with economic fundamentals while supporting growth momentum.
“Going forward, Bank Indonesia will continue to monitor the room for further rate cuts to encourage growth, depending on developments in the global and domestic economy,” Perry said.
Economists’ Expectations
The move was widely anticipated by analysts. Chief Economist of PT Bank Permata Tbk Josua Pardede said earlier this week that there was room for a rate cut in August, given the favorable inflation outlook and strengthening currency.
“Both headline and core inflation are at the lower bound of Bank Indonesia’s target range of 2% to 4%, and projections through the end of 2025 remain under control,” Josua told Investortrust on Tuesday, Aug 19, 2025.
He added that the rupiah’s recent appreciation provided additional scope for the central bank to ease policy without jeopardizing stability.
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