Arnoldus Kristianus, Jakarta – Bank Indonesia (BI) kept its benchmark interest rate unchanged at 5.5 percent following its June 17 18 Board of Governors Meeting, maintaining the Deposit Facility rate at 4.75 percent and the Lending Facility rate at 6.25 percent.

Governor Perry Warjiyo said the decision aligns with the central bank's outlook for low and controlled inflation in 2025 and 2026, within the target range of 2.5 percent. BI is also focused on maintaining rupiah stability in line with economic fundamentals while supporting sustainable economic growth.

Looking ahead, Bank Indonesia will continue to monitor the room for a rate cut to support economic growth, while ensuring inflation stays on target and the rupiah remains stable, Perry said during a virtual press briefing on Wednesday.

Permata Bank Chief Economist Josua Pardede had earlier forecast that BI would keep rates steady this month, as the central bank focuses on improving policy transmission to lending rates and supporting domestic economic activity.

Although global trade tensions have eased, Josua warned that rising geopolitical risks in the Middle East could reignite global risk-off sentiment and put pressure on the rupiah.

Still, he sees room for BI to cut rates later in the year, citing moderating economic growth, subdued inflation, the possibility of the US Federal Reserve easing, and Indonesia's relatively strong external position, reflected in a manageable current account deficit.

We expect BI to cut its benchmark rate by 25 basis points in the third quarter, bringing it to 5.25 percent and holding that level through year-end, Josua said.

Source: https://jakartaglobe.id/business/bank-indonesia-holds-benchmark-rate-at-55-pc