Bank Indonesia (BI) has reduced its benchmark interest rate to 5.75% following the central bank's Board of Governors Meeting on January 14–15, 2025. This marks a 25 basis-point cut from the previous rate and aligns with efforts to maintain inflation control and support sustainable economic growth.

“The Board of Governors decided to lower the BI Rate by 25 basis points to 5.75%,” said Perry Warjiyo, Governor of Bank Indonesia, during a press conference on Wednesday. Alongside this adjustment, the Deposit Facility rate was reduced to 5.00%, and the Lending Facility rate was lowered to 6.50%.

Perry emphasized that this decision aligns with BI's projections of low inflation rates for 2025 and 2026, which are expected to remain within the target range of 2.5% ± 1%. Additionally, the central bank seeks to stabilize the rupiah exchange rate while bolstering economic growth.

“This move is consistent with the continued low inflation outlook and the need to support economic expansion while ensuring the rupiah remains aligned with its fundamentals,” Perry explained.

Bank Indonesia also reaffirmed its commitment to closely monitor rupiah movements, inflation forecasts, and broader economic dynamics. Future policy adjustments will depend on global and domestic conditions.

The rate cut comes at a time when central banks worldwide are navigating complex economic scenarios. For Indonesia, lower interest rates aim to stimulate domestic consumption, support investment, and ensure the economy’s resilience in the face of global uncertainties.

In line with this policy, Bank Indonesia announced an infusion of liquidity incentives amounting to IDR 295 trillion, primarily benefiting private banks. This move seeks to enhance market liquidity and encourage lending activities.

Perry highlighted that BI remains focused on maintaining monetary policies that align with inflation targets and exchange rate stability while also fostering economic growth. The central bank continues to assess room for further monetary easing as global and national economic conditions evolve.

SOURCE: BISNISCOM | PHOTO: LIPUTAN6