Indonesia Macro Update - BI Rate Update 20 Feb 2025
KBVS MACRO UPDATE
Thursday, 19 February 2025
BI Rate Maintained at 5.75%: Balancing Stability and Growth
As anticipated, Bank Indonesia (BI) has maintained the BI Rate at 5.75%. In this RDG, BI reaffirmed its commitment to strengthening pro-market monetary operations, stabilizing the Rupiah exchange rate, enhancing macroprudential liquidity incentives, and expanding international cooperation in central banking, including the connectivity of payment systems and local currency transactions.
While a more inward-looking monetary policy may elevate short-term risks of capital outflows and Rupiah volatility due to global imbalances and a flight to quality, the move is likely to yield positive long-term outcomes. It offers an opportunity to foster investment optimism, strengthen consumer purchasing power, lower investment funding costs, and create better employment opportunities. As BI navigates these trade-offs, its decision underscores the delicate balance between addressing immediate market dynamics and fostering an environment conducive to robust, inclusive growth.
Regards,
KBVS Research Team