Bank Indonesia unexpectedly cut its benchmark interest rate by 25 bps to 4.75% at its September 2025 policy meeting, marking the third consecutive monthly rate cut and defying market expectations to hold rates steady at 5.0%. This is the sixth rate reduction 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 highest pace in two years.
Earlier this week, the government unveiled a stimulus package worth nearly USD 1 billion for Q4 of 2025. Meanwhile, annual inflation eased to 2.31% in August, staying well within the central bank's target 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%.
Source: Trading Economi
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