The Indonesian Central Bank (BI) has decided to maintain its benchmark interest rate at 5.75 percent in the March 2025 Board of Governors Meeting (RDG) as an effort to maintain the stability of the rupiah exchange rate and anticipate the continuing high global uncertainty. 

"This decision is consistent with maintaining the inflation forecast in 2025 and 2026 under control within the target of 2.5 percent ± 1 percent," BI Governor Perry Warjiyo told a media conference in Jakarta, on Wednesday, March 19, 2025. 

He cited that BI's move is in line with global economic conditions, especially the monetary policy of the United States. 

A macroeconomics and financial market researcher at the University of Indonesia’s Institute for Economic and Social Research (LPEM UI), Teuku Riefky, assesses that external risks still need to be anticipated, especially related to the direction of the Federal Reserve's (The Fed) interest rate policy. 

Riefky said that the announcement of results of the Fed's meeting coincided with the BI’s RDG. The market currently expects the Fed to also maintain its interest rates. 

"A rate cut by Bank Indonesia could add pressure to the rupiah," Riefky said. 

Stock market recovery

The Indonesia Stock Exchange (IDX Composite) began to show a recovery of around 1 percent in Wednesday's trading after BI's announcement regarding its interest rate policy.

However, on the other hand, the rupiah exchange rate is still under pressure, weakening by 0.7 percent even though BI has intervened in the market. 

According to BI's Director of Monetary Asset Management and Securities, Fitra Jusdiman, the rupiah's weakening was not only influenced by the stock market's fall on Tuesday, but also by external factors such as U.S.trade policy, expectations of the Fed's meeting this week, and geopolitical tensions in the Middle East 

"BI has and will continue to take anticipatory and mitigating responses to ensure the stability of the rupiah exchange rate, maintain the balance of foreign exchange supply and demand, including by intervening boldly and in a measured manner," Fitra said as quoted by Reuters.

BI is expected to continue optimizing monetary policy to maintain exchange rate stability and prevent a greater impact on domestic financial markets.