FX.co ★ Bank Indonesia Lowers Rate as Expected

Bank Indonesia decreased its benchmark interest rate by 25 basis points to 5.5% during its policy meeting in May 2025, aligning with market predictions. This move underscores the central bank's confidence in sustaining low and stable inflation within the target range of 2.5% ± 1% for both 2025 and 2026, while also ensuring the stability of the Rupiah and promoting economic growth. In April 2025, the annual inflation rate rose to 1.95% from 1.03% in March, hitting its highest point since August 2024, yet still comfortably within the central bank’s target range. Concurrently, the Rupiah appreciated by 1.13% against the US dollar from end-April to May 20, and it also gained value compared to the currencies of significant trade partners in emerging markets and major non-USD currencies. The rates for the overnight deposit facility and lending facility were similarly reduced by 25 basis points to 4.75% and 6.25%, respectively.