Indonesia Macro Update - BI Rate Update 19 Feb 2025
KBVS MACRO UPDATE
Thursday, 19 February 2026
Bank Indonesia Maintains Policy Rate Amid Currency Pressures and Seasonal Inflation Risk
Bank Indonesia (BI) decided to keep the BI Rate unchanged at 4.75% as part of its commitment to safeguarding Rupiah stability amid persistent global financial market uncertainty. Rupiah depreciation remains the primary transmission channel for imported inflation. In this environment, a premature policy rate cut could amplify inflation expectations and further weaken currency stability.
At the same time, Indonesia’s macroeconomic fundamentals remain relatively resilient. These fundamentals support Bank Indonesia’s view that the Rupiah is currently undervalued.
Nevertheless, external pressures remain elevated. Heightened global geopolitical tensions have sustained risk-off sentiment and capital flight to safe-haven assets. The urgency of BI’s stabilization mandate is reflected in recent foreign exchange market dynamics.
To structurally defend the Rupiah, Bank Indonesia is expected to intensify its stabilization measures through a comprehensive “triple intervention” strategy. Concurrently, to mitigate seasonal inflationary pressures, BI will strengthen coordination with central and regional inflation control teams (TPID). Overall, maintaining the policy rate at this juncture reflects a prudent and forward-looking stance, balancing currency stability, inflation control, and macroeconomic resilience amid an uncertain global environment.
Regards,
Fikri C. Permana – KBVS Research Team