Indonesia Interest Rate

Bank Indonesia unexpectedly cut its benchmark interest rate by 25 bps to 4.75% at its September 2025 policy meeting, defying market expectations to hold rates steady at 5.00%. The central bank has now cut rates by 150 bps since last September, bringing the benchmark rate to its lowest level since October 2022. The decision reflects projections that inflation for 2025–2026 will remain within the central bank’s target range of 2.5% ± 1%, a stable rupiah exchange rate, and ongoing efforts to support economic growth. Recent data showed that GDP grew by 5.12% yoy in Q2, its fastest pace in two years, while annual inflation eased to 2.31% in August. Earlier this week, the government unveiled a stimulus package worth nearly USD 1 billion for Q4 to boost GDP growth. The central bank expects economic growth to exceed the midpoint of the 4.6%–5.4% range. Additionally, the overnight deposit facility rate was lowered by 50 bps to 3.75%, while the lending facility rate was cut by 25 bps to 5.50%.