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Bank Indonesia Holds Interest Rate Steady At 5.5% As Expected; Hints At Reduction
(RTTNews) - Indonesia's central bank left its benchmark interest rate unchanged on Wednesday after a quarter-point reduction in May and hinted at further reduction to support economic growth.
The Bank Indonesia Board, led by Governor Perry Warjiyo, maintained the BI rate at 5.50 percent. The bank had reduced the rates twice this year, in May and January. The deposit facility interest rate was retained at 4.75 percent and the lending facility interest rate at 6.25 percent.
The bank said it will continue to monitor the room for lowering the interest rate in order to encourage economic growth, while maintaining inflation in line with its target and the stability of the currency exchange rate.
Bank Indonesia observed that economic growth needs support amid global uncertainty due to the protective trade policies of the U.S. and geopolitical tensions.
The bank forecast economic growth this year to be 4.6-5.4 percent, and inflation is expected to be 1.5-3.5 percent this year and next.
With real policy rates still close to 4 percent, the bank is still likely to deliver considerable easing of 75 basis points by the first quarter of 2026, ING economist Deepali Bhargava said.
Rising risks to growth from tariffs and an uncertain investment climate, combined with domestic policy uncertainty, increase the risks of higher-than-expected rate cuts, the economist added.
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