Bank Indonesia Reduces Benchmark Interest Rate to 5.25 Percent

(MENAFN) Bank Indonesia has reduced its benchmark interest rate by 25 basis points to 5.25 percent following a two-day Board of Governors Meeting that concluded Wednesday.

Alongside the rate cut, the central bank adjusted its deposit facility rate to 4.50 percent and its lending facility rate to 6.00 percent, signaling a broader shift toward monetary easing.

“This decision is consistent with lower inflation projections for 2025 and 2026 within the target of 2.5±1 percent, the maintained stability of the rupiah in line with its fundamentals, and the need to continue supporting economic growth,” said central bank Governor Perry Warjiyo during a press briefing on Wednesday.

He noted that the bank is intensifying accommodative macroprudential measures to stimulate lending activity and enhance banking sector liquidity. Simultaneously, it is working to keep the rupiah stable through strategic foreign exchange market interventions and secondary market purchases of government bonds.

Warjiyo projected continued rupiah stability through mid-2025, underpinned by stronger foreign capital inflows and bolstered forex policy frameworks, adding that consumer price growth remains under control.

In a move to advance digital finance, Bank Indonesia is accelerating its payment system modernization. A major step in this direction is the upcoming launch of cross-border QRIS payment links with Japan and China, expected in August—an initiative designed to further expand the nation's electronic transaction ecosystem.

Despite rising global uncertainties, the central bank remains confident in its current strategy. By combining monetary policy, macroprudential tools, and digital infrastructure initiatives, Bank Indonesia aims to maintain economic resilience and drive a sustainable recovery.

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