FX.co ★ Indonesia Holds Rates Steady as Expected

In its June 2025 policy meeting, Bank Indonesia decided to maintain its benchmark interest rate at 5.5%, aligning with market forecasts and following a 25 basis point reduction in May. This decision is underpinned by declining inflation, a stable Rupiah exchange rate, and ongoing efforts to support economic expansion. Annual inflation eased to 1.60% in May 2025, down from an eight-month peak of 1.95% in April, as price hikes slowed after the Eid al-Fitr celebrations. Inflation remains comfortably within Bank Indonesia's target range of 1.5% to 3.5%. Meanwhile, the Rupiah appreciated by 0.06% against the US dollar on a point-to-point basis (as of June 17 compared to the end of May) and strengthened against currencies of major non-USD economies and significant trade partners in emerging markets. The central bank anticipates that economic growth for 2025 will align with its target range of 4.6% to 5.4%. The overnight deposit facility and lending facility rates remain unchanged at 4.75% and 6.25%, respectively.