After three consecutive rate cuts, the Indonesian Central Bank (BI) has decided to hold its benchmark interest rate at 4.75 percent, maintaining a delicate balance between supporting economic growth and preserving financial stability amid persistent global uncertainty.

The decision was announced by BI Governor Perry Warjiyofollowing the central bank’s Board of Governors Meeting (RDG) held on October 21–22, 2025. The meeting also kept the deposit facility rate at 3.75 percent and the lending facility rate at 5.50 percent.

“The Board of Governors Meeting on October 21–22 decided to maintain the BI Rate at 4.75 percent,” Perry said in a virtual press conference on Wednesday, October 22, 2025.

The move marks a pause after BI’s series of rate cuts over the past months. The central bank had lowered its policy rate three times consecutively between July and September 2025, with a total reduction of 150 basis points since September 2024.

Perry said the decision to hold rates steady was consistent with BI’s inflation outlook, which remains within the 1.5–3.5 percent target range for 2025–2026, and with efforts to safeguard the rupiah’s stability in line with its economic fundamentals.

“Going forward, Bank Indonesia will continue to monitor the effectiveness of the accommodative monetary policy transmission, as well as the outlook for growth, inflation, and the rupiah exchange rate,” he said.

Perry added that BI would continue strengthening its macroprudential policy to encourage lower lending rates, improve liquidity, and support stronger credit growth in order to boost the economy.

The central bank will also enhance its payment system policy, focusing on expanding digital payment adoption, improving the industry structure, and ensuring the resilience of payment infrastructure.

Outlook

Economist at the Institute for Economic and Social Research, University of Indonesia (LPEM FEB UI), Teuku Riefky, said BI’s decision to hold its policy rate steady was the right move to maintain investor confidence and currency stability.

“Keeping the policy rate stable rather than cutting it further will not only ease pressure on the rupiah but also help counter perceptions of BI’s weakening independence,” Riefky said as quoted by Kompas on Wednesday, October 22, 2025.

He noted that BI’s recent aggressive rate cuts and quasi-fiscal lending initiatives had already raised investor concerns about fiscal dominance, triggering capital outflows and currency depreciation.

Foreign investors recorded net sales of Rp30.76 trillion in the domestic financial market over the past month, mainly from government bond (SBN) sales totaling Rp28.71 trillion, contributing to rupiah weakness.

As of October 17, 2025, the rupiah was traded at Rp16,577 per US dollar, down 3.05 percent year-to-date, reflecting declining investor confidence in Indonesia’s economic prospects.

Meanwhile, inflation edged up to 2.65 percent year-on-year in September 2025, from 2.31 percent in August, amid rising domestic demand ahead of the year-end holiday season.

“Domestic demand will likely remain moderate, considering the lagging effects of monetary easing and the gradual rollout of the government’s spending package in the fourth quarter,” Riefky said.