Bank Indonesia Holds BI Rate at 4.75%, Focuses on Rupiah Stability and Growth Support
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JAKARTA, Investortrust.id — Bank Indonesia has kept its benchmark interest rate at 4.75% following its Board of Governors Meeting held on Oct 21–22, 2025. Governor Perry Warjiyo said the decision reflects the central bank’s commitment to safeguarding macroeconomic stability amid persistent global uncertainties while maintaining growth momentum.
“The Board decided to hold the BI Rate at 4.75%, the deposit facility rate at 3.75%, and the lending facility rate at 5.5%,” Perry announced during the October policy briefing on Wednesday, Oct 22, 2025.
The announcement came as the Jakarta Composite Index fell by 85 points, or 1%, to 8,155 by 2:35 p.m. local time, reversing gains from the previous two days as banking shares turned weaker.
The central bank’s decision aligns with its projection that Indonesia’s inflation will remain within the 2.5% ±1% target range through 2026. In addition to maintaining rupiah stability in line with economic fundamentals, the policy is aimed at supporting growth through stronger monetary–fiscal synergy and accommodative liquidity measures.
Perry emphasized that Bank Indonesia will continue to monitor the effectiveness of monetary transmission, the outlook for growth and inflation, and exchange rate dynamics. The bank will also strengthen macroprudential policies to lower lending rates, boost liquidity, and enhance financing access for the real sector.
On payment systems, Bank Indonesia reaffirmed its commitment to expanding digital payment adoption, fortifying the financial infrastructure, and ensuring resilience across the national payment ecosystem.
To stabilize the rupiah, BI has intensified interventions in both the spot and Domestic Non-Deliverable Forward (DNDF) markets, alongside secondary market purchases of government bonds (SBN). “These measures have yielded positive results, as reflected in the rupiah’s appreciation in October 2025,” Perry said.
He reiterated that Indonesia’s economic growth in 2025 will likely exceed 5%, supported by improving exports and robust domestic demand. “Economic growth for the full year 2025 is projected slightly above the midpoint of 4.6%–5.4%, with further improvement expected in 2026,” Perry added.
He noted that in the third quarter of 2025, growth was driven by stronger exports of palm oil and iron and steel, as the government anticipated potential reciprocal tariff measures from the United States.
Economists See BI’s Decision as Key to Rupiah Stability
Economists from the University of Indonesia and Bank Mandiri said Bank Indonesia’s decision to maintain its benchmark rate in October 2025 was essential to preserving confidence in the rupiah and the central bank’s independence.
Teuku Riefky, economist at the Institute for Economic and Social Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), said keeping the rate steady was the right move. “Maintaining the rate, rather than cutting it, not only eases pressure on the rupiah but also strengthens the perception of BI’s independence,” Riefky said in a statement on Tuesday, Oct 21, 2025.
He noted that the U.S. Federal Reserve’s decision in September 2025 to lower its rate from 4.5%–4.75% to 4.25%–4.5% did not trigger capital inflows into emerging markets. Instead, Indonesia saw large outflows, exacerbated by risks such as a potential U.S. government shutdown, a 100% import tariff threat against China, and heightened Middle East tensions that prompted investors to seek safe-haven assets.
Riefky added that previous BI rate cuts in September and the government’s burden-sharing arrangement with the central bank had raised concerns among investors about fiscal dominance. “Markets perceived an erosion of BI’s independence due to these coordinated policies,” he said.
Foreign investors recorded a net sell of US$1.88 billion (about Rp 30 trillion) in government bonds between Sept 17 and Oct 17, 2025. Despite the outflows, yields on government securities declined, with the 10-year benchmark down 34 basis points to 6.06%, and the one-year bond yield down 26 basis points to 4.71% — a sign that investors still have confidence in Indonesia’s long-term fiscal outlook.
Speaking before the rate announcement, Bank Mandiri Chief Economist Andry Asmoro shared a similar view, saying BI’s cautious stance was necessary to ensure stability. “The decision reflects BI’s intention to balance macroeconomic stability with effective policy transmission so that monetary easing does not undermine growth,” Andry told Investortrust.id.
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