Bank Indonesia has opted to maintain its benchmark interest rate at 4.75% following its October 2025 Board of Governors Meeting, signaling a continued commitment to accommodative monetary policy. With inflation under control and the rupiah relatively stable, the central bank is focusing on enhancing liquidity and credit growth to sustain economic momentum. This decision reflects a broader strategy to balance macroeconomic stability with long-term development goals.
Key Facts & Background
- BI Rate (benchmark interest rate): Held at 4.75% during the October 21–22, 2025 meeting.
- Deposit facility rate: Maintained at 3.75%.
- Lending facility rate: Maintained at 5.50%.
- Inflation outlook: Projected to remain within the target range of 2.5% ± 1% for 2025 and 2026.
- Rationale for rate decision:
- To support economic growth.
- To maintain rupiah stability amid global uncertainty.
- To ensure effective transmission of monetary easing.
- Monetary operations strategy:
- Pro-market approach to deepen money and forex markets.
- Liquidity enhancement through secondary market purchases of government securities (SBN).
- Exchange rate stabilization tools:
- Spot and DNDF (Domestic Non-Deliverable Forward) interventions.
- Offshore NDF transactions.
- Macroprudential policy measures:
- Strengthening liquidity incentives (KLM), effective December 1, 2025.
- Promoting credit growth and financial system resilience.
- Payment system strategy:
- Expanding digital payment acceptance.
- Enhancing payment infrastructure and industry structure.
- Additional initiatives:
- Transparent publication of base lending rate assessments (SBDK).
- Innovation in digital finance.
- Broader international cooperation in central banking.
Strategic Insights
Bank Indonesia’s decision to maintain the BI Rate at 4.75% reflects a cautious yet supportive stance in navigating a complex global economic environment. With inflation well within target and the rupiah relatively stable, the central bank is prioritizing the transmission of monetary easing to stimulate domestic demand, particularly through increased credit and liquidity. This approach underscores the importance of synchronizing monetary, macroprudential, and payment system policies to achieve sustainable growth.
The emphasis on pro-market monetary operations and deepening financial markets is particularly timely. By enhancing liquidity and facilitating more efficient price discovery in money and forex markets, Bank Indonesia aims to improve the responsiveness of financial institutions to policy signals. This is crucial for ensuring that lower interest rates translate into real sector benefits, such as affordable financing and investment expansion.
Exchange rate management remains a cornerstone of BI’s strategy, especially amid persistent global volatility. The use of spot, DNDF, and offshore NDF instruments allows the central bank to intervene flexibly while preserving market confidence. Coupled with secondary market purchases of government bonds, these measures help stabilize capital flows and maintain orderly financial conditions.
The rollout of performance-based macroprudential liquidity incentives (KLM) marks a shift toward more targeted and forward-looking regulation. By rewarding banks that expand productive lending, BI is aligning financial sector behavior with national development priorities. This complements broader efforts to promote transparency in lending rates and foster innovation in digital finance.
On the payment system front, BI’s push for wider digital acceptance and infrastructure resilience supports financial inclusion and economic efficiency. As digital transactions become mainstream, ensuring robust and interoperable systems will be key to maintaining trust and accessibility.