Jakarta, Indonesia Sentinel — Bank Indonesia (BI) has decided to further lowering its benchmark interest rate or BI Rate by 25 basis points (bps) to 5%. The moves follow its board of governors meeting on August 19–20.
“The BI Board of Governors on August 19–20, 2025, decided to reduce the BI Rate by 25 basis points to 5%,” Governor Perry Warjiyo said on August 20.
Alongside the policy rate cut, BI trimmed the Deposit Facility rate by 25 basis points to 4.25% and the Lending Facility rate to 5.75%.
The central bank said the move was consistent with its projection that inflation will remain within the 2.5% ±1 target range in both 2025 and 2026, while the rupiah exchange rate remains stable.
Perry added that the cut was necessary to support economic growth in line with Indonesia’s economic capacity.
BI also emphasized continued coordination with the government to safeguard stability and foster growth under the government’s Asta Cita program.
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The August cut marks BI’s fourth rate reduction this year. The central bank first lowered its policy rate in January from 6% to 5.75%, followed by cuts in May to 5.5% and in July to 5.25%. The latest move brings borrowing costs to their lowest level of 2025.
Despite the benchmark interest rate being at its lowest this year, BI left the room open for further easing.
“Going forward, BI will continue to monitor the room for further rate cuts to support stronger economic growth, in line with low inflation projections, while maintaining rupiah stability,” Perry said.
The central bank also pledged to strengthen macroprudential measures to boost lending, lower borrowing costs, and increase banking sector liquidity.
In addition, BI said it would expand digital payment adoption, strengthen payment system infrastructure, and bolster industry resilience to support economic activity.
(Raidi/Agung)
