Bank Indonesia Lowers Interest Rate to 5.75 Pct. as per January 2025

Friday, 17 January 2025

Bank Indonesia Lowers Interest Rate to 5.75 Pct. as per January 2025

Author: Dhita Ariiqoh Putri
January 16, 2025

PHOTO: Setkab.go.id

SEAToday.com, Jakarta - Indonesian central bank Bank Indonesia (BI) has announced a 25-basis-point (bps) reduction in its benchmark BI 7-day Repo Rate (BI7DRR), bringing it down to 5.75 percent. The decision was made during the BI Board of Governors (RDG) meeting on Wednesday (1/15).

In tandem with the rate cut, the central bank also lowered the lending facility rate by 25 bps to 6.5 percent and the deposit facility rate by 25 bps to 5 percent.

BI Governor Perry Warjiyo explained that the move aligns with the central bank’s monetary policy stance, aimed at maintaining inflation within the target range of 2.5 percent ±1 percent for 2025 and 2026, while also supporting sustainable economic growth.

The BI rate plays a critical role in influencing banking rates across the country. A lower BI rate typically leads to reduced deposit and lending rates at banking institutions, which can stimulate economic activity by encouraging borrowing and spending.