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The central bank of Indonesia (Bank Indonesia) surprised markets by cutting its benchmark interest rate by 25 basis points to 4.75 percent at the September 2025 monetary policy meeting. It was the sixth rate cut in a monetary easing cycle that started in September 2024.
On Tuesday (18 March 2025), the Indonesia Stock Exchange (IDX) decided to temporarily suspend trading as the benchmark Jakarta Composite Index (IHSG) plunged 5 percent. Such trading halts target at stabilizing Indonesia's capital markets (as the rupiah was also dragged down by the capital outflows).
On Friday 6 September 2024 Indonesia Investments released the August 2024 edition of its monthly report. This report discusses various economic, political and social topics that were relevant (to Indonesia) in the month of August 2024.
In March 2022 the US Federal Reserve started to tighten its monetary policy in an aggressive manner to combat high US inflation that –at one point– touched a 40-year high.
On 06 June 2023 Indonesia Investments released the May 2023 edition of our monthly report. The report discusses key economic, political and social issues that impacted on Indonesia in the month of May 2023.
Before we give an update on the monetary policy of Indonesia’s central bank (Bank Indonesia), it is worth mentioning that Bank Indonesia Governor Perry Warjiyo was appointed for another five-year term (2023-2028) as the central bank’s chief.
The central bank of Indonesia (Bank Indonesia) raised its benchmark interest rate (BI 7-day reverse repo rate) by 25 basis points (bps) after concluding its two-day policy meeting on 18-19 January 2023. Indonesia’s benchmark rate now stands at 5.75 percent. It also raised its deposit facility and lending facility rates by 25 bps to 5.00 percent and 6.50 percent, respectively.
As expected, the central bank of Indonesia (henceforth: Bank Indonesia) decided to raise its benchmark interest rate (the 7-Day Reverse Repo Rate) by 25 basis points (bps) to 5.50 percent after concluding its latest (two-day) monetary policy meeting on 21-22 December 2022. Meanwhile, it also decided to raise the deposit facility and lending facility rates by 25 bps to 4.75 percent and 6.25 percent, respectively.
On 07 November 2022 Indonesia Investments released the October 2022 edition of its monthly report. Our report presents in-depth and independent analyses of a range of economic, political and social subjects that have been in the news in the month of October 2022.
Last month we stated that Indonesia’s central bank (Bank Indonesia) might just be at the start of a (prolonged) monetary tightening cycle. After all, higher interest rates is what we see happening across the world; a development that is led by the Federal Reserve (Fed) that has been aggressively raising its benchmark interest rate to fight inflation. This then causes capital outflows from most other parts of the world.
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Last month, we saw that the Indonesian rupiah started appreciating when the world was focused on the US Federal Reserve’s response to the collapse of three American banks (followed by trouble at Credit Suisse).
There are analysts who believe that the international banking crisis that started in the second week of March 2023 is just the beginning of more to come. After Credit Suisse was affected amid the global decline of confidence in the banking sector, some now fear that German bank Deutsche Bank could be the next victim. What does this mean for the Indonesian rupiah?
In line with expectations, the central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate (BI 7-Day Reverse Repo Rate) at 5.75 percent after the two-day policy meeting on 15-16 February 2023. It also kept its deposit facility and the lending facility at 5.00 percent and 6.50 percent, respectively.
As expected, the central bank of Indonesia (Bank Indonesia) decided to impose a 50 basis points (bps) interest rate hike after concluding its two-day monetary policy meeting on 16-17 November 2022.
As usual, we devote our first article to the Indonesian economy. But before we zoom in on the latest macroeconomic data of Indonesia, we first provide some context by discussing the global economy.
What came as a surprise to us is that the Asian Development Bank (ADB) decided to raise its projection for Indonesia’s economic growth in full 2022 from 5.0 percent year-on-year (y/y) to 5.2 percent (y/y) in July 2022. This decision was substantiated in its Asian Development Outlook 2022 Supplement entitled Recovery Faces Diverse Challenges.
Again, the central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate (called the ‘BI Seven-Day Reverse Repo Rate’) at 3.50 percent after concluding its latest monetary policy meeting (on 20-21 July 2022).
We were surprised to learn that Indonesia’s central bank (Bank Indonesia) decided to leave its interest rates unchanged at the two-day monetary policy meeting on 23-24 May 2022. The benchmark BI 7-Day Reverse Repo Rate was kept at 3.50 percent, while the deposit facility and lending facility rates were maintained at 2.75 percent and 4.25 percent, respectively. We had expected Bank Indonesia to raise its key rate by 0.25 percent to 3.75 percent at this occasion.
In the last week of December 2021, Perry Warjiyo, Governor of Indonesia’s central bank (Bank Indonesia), sent a strong signal to markets that the benchmark interest rate of Indonesia (seven-day reverse repo rate) will not be raised before Q3-2022. This is much later than we initially expected.
Around a month ago, economists in the West started to become increasingly certain that the US Federal Reserve (Fed) is to announce a plan to taper its asset purchases. Not only that, they also expect the announcement to come soon.
