Bank Indonesia Maintains Benchmark Rate at 4.75 Percent

October 22, 2025 | 04:50 pm

TEMPO.CO, Jakarta - Bank Indonesia has maintained its benchmark interest rate, or BI Rate, at 4.75 percent. This decision was agreed upon during the Bank Indonesia Board of Governors Meeting held on October 21-22, 2025.

"The Bank Indonesia Board of Governors Meeting on October 21 and 22, 2025, decided to maintain the BI Rate at 4.75 percent," said BI Governor Perry Warjiyo in a virtual press conference on Wednesday, October 22, 2025.

BI also maintained the deposit facility interest rate at 3.75 percent and the lending facility interest rate at 5.5 percent.

According to Perry, this decision is consistent with inflation forecasts for 2025 and 2026, which are expected to remain low within the target range of 2.5 plus/minus 1 percent. He added that the hold is an effort to maintain the stability of the rupiah exchange rate in line with high global fundamentals, as well as to synergize efforts to further strengthen economic growth.

Perry stated that Bank Indonesia will continue to monitor the effectiveness of monetary easing policy transmission, prospects for economic growth and inflation, and exchange rate stability when utilizing the room for a BI Rate cut.

"Bank Indonesia is also strengthening macro-prudential policies to further drive down interest rates, increase liquidity, and boost credit financing growth to achieve higher economic growth," Perry added.

Prior to the decision, the Institute for Economic and Social Research (LPEM) at the Faculty of Economics and Business, University of Indonesia, had assessed that Bank Indonesia needed to maintain the benchmark interest rate at 4.75 percent.

LPEM UI economist Teuku Riefky stated that BI needs to align its steps with its goal of maintaining rupiah stability. "Maintaining the benchmark interest rate, compared to further interest rate cuts, will not only reduce pressure on the rupiah but also reduce the perception of BI's independence eroding," Riefky said in the Macroeconomic Analysis Report released on Tuesday, October 21, 2025.

One key consideration for BI to maintain the benchmark interest rate is the volume of capital outflows and pressure on the rupiah. LPEM UI noted that the net sale of government bonds by foreign investors reached US$1.88 billion during the period from September 17 to October 17, 2025.

Furthermore, as of October 17, 2025, the rupiah exchange rate was at Rp16,577 per US dollar, representing a 3.05 percent depreciation year to date.

Riefky argued that the outflow of foreign capital and depreciation of the rupiah were due to several recent government policies in the financial sector. He claimed that the sustained monetary easing cycle, the launch of a burden-sharing program, and a drastic cut of 100 basis points (bps) in the deposit facility rate since July "have sent worrying signals about fiscal dominance and the erosion of Bank Indonesia's independence to investors."

The decision comes after BI had cut the benchmark interest rate five times this year. Since January 2025, the BI Rate had been gradually reduced from 6 percent at the beginning of the year to 5.75% (January), 5.5% (May), 5.25% (July), 5.00% (August), and 4.75% (September 2025).

Editor’s Choice: Indonesian Economist: Lower BI Rate Won't Trigger Unchecked Capital Outflow

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