JAKARTA — Bank Indonesia (BI) is expected to maintain its benchmark seven-day reverse repurchase rate at 5.25% during its August 20, 2025, meeting, pausing its easing cycle to evaluate recent economic trends, according to a Reuters poll conducted from August 11-18. The decision follows a 25-basis-point rate cut last month, with inflation climbing to 2.37% in July, nearing the midpoint of BI’s 1.5%-3.5% target range, and economic growth holding steady at 5.12% in the April-June quarter, per Reuters.
More than 80% of economists surveyed, 24 out of 29, anticipate BI will hold rates steady to assess the impact of prior cuts, which totaled 100 basis points since September 2024. “Growth momentum would reduce in the second half,” noted Lavanya Venkateswaran, an economist at OCBC, highlighting that a neutral fiscal stance leaves monetary policy as the primary tool to bolster Indonesia’s economy, per Reuters. The poll suggests BI may resume easing in the fourth quarter, potentially lowering rates to 5.00% by year-end, as sluggish loan growth signals the need for further stimulus.
Key factors influencing BI’s stance include:
- Inflation Trends: July’s 2.37% rate, up from June’s 1.9%, remains within target but limits aggressive cuts.
- Rupiah Stability: BI’s interventions aim to stabilize the currency, projected to weaken to 16,500 per USD by Q3.
- Growth Outlook: A separate Reuters poll forecasts a slowdown to 4.7% growth in the second half of 2025
Sentiment on X, including posts from @AlvaApp underscores BI’s cautious approach amid global uncertainties like U.S. Federal Reserve policies. As Indonesia navigates trade tensions and domestic demand challenges, BI’s next moves will hinge on balancing growth and currency stability.
Source: Reuters
