Bank Indonesia Holds BI Rate at 4.75% as Focus Shifts to Rupiah Defense and Faster Transmission
Key Takeaways
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JAKARTA, Investortrust.id — Bank Indonesia keeps the BI Rate at 4.75 percent at its 18–19 November 2025 Board of Governors meeting, alongside the 3.75 percent Deposit Facility and 5.50 percent Lending Facility, prioritizing rupiah stability and foreign portfolio inflows while inflation stays within the 2.5 percent plus or minus 1 percent target band.
Unlike the October statement, which stressed designing room for future cuts, the November communication sounds more defensive on external risks and more operational: BI still talks about scope for further easing, but frames the current stance as a shield against renewed global uncertainty while earlier monetary and macroprudential loosening works its way through the system.
Bank Indonesia Governor Perry Warjiyo explains that the decision is consistent with the short-term policy focus on maintaining rupiah stability and attracting foreign portfolio inflows amid rising global uncertainty. “While continuing to strengthen the effectiveness of the monetary and macroprudential easing measures we have already implemented,” Perry says.
The central bank strengthens exchange rate defense through combined offshore and onshore intervention in NDF, DNDF, and spot markets, backed by measured government bond purchases, while also expanding foreign exchange operations and money market instruments in Chinese yuan and Japanese yen to deepen local currency transactions and keep Indonesian assets attractive.
On the policy mix, BI moves from October’s focus on designing the Liquidity Incentive Macroprudential Policy (KLM) to November’s emphasis on execution: incentives already reach about Rp404.6 trillion across major bank groups, are tightly linked to lending into priority sectors such as agriculture, manufacturing, housing, transport, MSMEs and green activities, and are expected to add roughly Rp18.5 trillion more liquidity under the strengthened framework effective 1 December 2025.
Transmission of monetary easing remains BI’s main frustration. The November statement is more pointed than October in calling out slow declines in deposit and lending rates, explicitly blaming “special rates” for large depositors that now cover more than a quarter of banking-sector funds and keep funding costs high, even as money market rates, SRBI yields, and government bond yields have already dropped by more than 200 basis points.
Growth stays resilient but below potential, with GDP up 5.04 percent year on year in the third quarter of 2025, supported by exports and faster government spending, while household consumption and investment still need to strengthen; BI now sounds slightly more upbeat than in October, projecting full-year growth in the 4.7–5.5 percent range and a pick-up in 2026 on the back of fiscal stimulus, priority projects, and seasonal year-end demand.
Inflation is firmly within target at 2.86 percent year on year in October 2025, with core inflation at 2.36 percent, low administered prices inflation, and elevated volatile food inflation due to weather-related supply shocks; BI reiterates that inflation in 2025 and 2026 will remain inside the 2.5 percent plus or minus 1 percent band, supported by food-price coordination and the disinflationary impact of digitalization.
External buffers stay strong, with a current account position hovering between a small surplus and a modest deficit, foreign direct investment remaining positive, and foreign exchange reserves rising to 149.9 billion US dollars, equal to about 6.2 months of imports; compared with October, when the focus was on portfolio outflows and heavy intervention, the November tone highlights early signs of net portfolio inflows of around 1.8 billion US dollars into equities in the fourth quarter.
Credit growth remains softer than BI would like at 7.36 percent year on year in October, with large undisbursed loan lines, ample liquidity, and healthy capital and asset quality ratios showing that the main obstacles are cautious business sentiment and still-high lending rates rather than bank capacity; BI leans harder than in October on moral suasion for banks to cut rates faster and channel KLM-backed liquidity into real-sector lending.
Digital payments and financial transactions continue to surge, with October 2025 digital payment volumes up more than 30 percent year on year and QRIS transactions rising by over 100 percent, supported by BI FAST, RTGS, and expanded cross-border QRIS linkages; BI presents this as a structural growth driver that complements its monetary and macroprudential stance, similar to October but with more emphasis on implementation and regional connectivity.