The Indonesian Central Bank (BI) unexpectedly lowered its benchmark interest rate by 25 basis points (bps) to 4.75 percent on Wednesday, September 17, 2025, surprising markets that had broadly anticipated a hold.

BI Governor Perry Warjiyo announced the decision following the central bank’s two-day Board of Governors meeting, saying the deposit facility rate was also reduced by 50 bps to 3.75 percent, while the lending facility was cut by 25 bps to 5.50 percent.

“The Board of Governors Meeting on September 16–17, 2025 decided to lower the BI Rate by 25 bps to 4.75 percent,” Perry told reporters.

The move marks the fourth rate cut this year, after similar reductions in January, May, July, and August. BI has now lowered its policy rate by a total of 125 bps from 6.00 percent at the end of 2024.

The decision ran counter to the consensus of both local and international economists. A Bloomberg poll of 38 economists showed a median forecast of the BI rate being held steady at 5.00 percent, with only two projecting a cut.

Similarly, a CNBC Indonesia survey of 12 institutions found 10 expected no change, while just two predicted a reduction.

Permata Bank chief economist Josua Pardede said earlier this week that BI was more likely to stay on hold, citing concerns over rupiah stability amid recent political and economic uncertainty.

He pointed to nationwide demonstrations in late August and a cabinet reshuffle that saw Purbaya Yudhi Sadewa replacing Sri Mulyani Indrawati as finance minister.

Ryan Kiryanto, senior economist and associate faculty at the Indonesian Banking Development Institute (LPPI), had also anticipated a hold, saying macroeconomic conditions remained supportive, bolstered by pro-growth fiscal policies, including Rp200 trillion in liquidity placements with state-owned banks.

The surprise cut comes as the U.S. Federal Reserve is widely expected to reduce its Fed Funds Rate by 25 bps at its September meeting, following signs of a cooling US labor market.

BI appears to have taken a more aggressive stance, prioritizing growth support while signaling confidence in its ability to manage rupiah volatility.