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Indonesia: Bank Indonesia leaves rates unchanged in April
Loosening cycle paused for third consecutive time: At its meeting on 22–23 April, Bank Indonesia (BI) maintained the BI-Rate at 5.75%, pausing its loosening cycle for the third consecutive time this year.
Rupiah stability prioritized: The Central Bank’s decision to hold interest rates steady was motivated by the desire to have inflation within its 1.5–3.5% target range for 2025 and 2026, and ensure stability of the rupiah amid global trade uncertainties. Regarding economic activity, BI stated that economic growth was stable in Q1, giving the Bank room to hold rates steady.
Cuts projected ahead: While the release did not provide specific guidance on future decisions, BI said it would closely monitor the inflation and economic growth outlooks, as well as rupiah exchange rate movements. Most of our panelists expect BI to resume its loosening cycle at its next meeting on 20–21 May. Overall in 2025, our Consensus is for around 50 basis points worth of cuts.
Panelist insight: Analysts at the EIU said:
“The rupiah has also been on a weakening trend in recent months. As a result, the central bank will also place a high importance on maintaining rupiah stability. This means that it will remain cautious and make only small adjustments to avoid putting excessive pressure on the currency. We expect this to result in a single and final 25-basis-point cut later in 2025. That said, if the rupiah recovers its value, there is a risk that BI will bring forward its interest-rate cut and/or opt for a greater number of cuts.”
