FX.co ★ Indonesia Holds Rates Steady for 3rd Month

Bank Indonesia (BI) opted to keep its benchmark interest rate unchanged at 4.75% during its December 2025 policy meeting, aligning with market expectations and aiming to bolster the rupiah, even as economic growth shows signs of deceleration. This decision follows a cumulative 150 basis point reduction since September of last year, bringing the rate to its lowest point since October 2022 in a bid to stimulate economic activity. The central bank's stance indicates confidence that inflation for 2025–2026 will remain within the target range of 2.5% ± 1%, bolstered by a stable rupiah and continuous efforts to support economic growth. Recent figures indicate that GDP increased by 5.04% year-on-year in the third quarter, a slowdown from the two-year peak achieved in the second quarter, while annual inflation decreased to 2.72% in November from October's 18-month peak of 2.86%, staying within BI's target. Bank Indonesia noted that there remains scope to lower interest rates in light of subdued inflation, with future decisions regarding timing and scale contingent on prevailing economic conditions.