Bank Indonesia's benchmark interest rate remains at 5.75% in February 2025.

Bank Indonesia (BI) holds its benchmark interest rate, the BI 7-Day Reverse Repo Rate (BI7DRR), steady at 5.75%. This decision was made during a Board of Governors meeting held on February 18-19, 2025.

The deposit facility interest rate remains at 5%, and the lending facility interest rate at 6.50%.

According to Katadata, BI Governor Perry Warjiyo explained that this decision was made after maintaining the inflation forecast for 2025 and 2026 within the target of 2.5% plus or minus 1%.

Perry and the board also assessed overall global and domestic economic conditions and projections. He stated that the rupiah exchange rate remains stable and that the BI rate cut in January 2025 is expected to keep inflation within the target.

(Read also: BI Cuts Interest Rate to 5.75% at the Beginning of 2025)

BI Still Needs to Hold Interest Rates

BI's decision aligns with the forecast of the Economic and Community Research Institute of the Faculty of Economics and Business, University of Indonesia (LPEM FEB UI). The central bank still needs to maintain its benchmark interest rate this month.

LPEM FEB UI Macroeconomics and Financial Markets Researcher Teuku Riefky highlighted that global and domestic uncertainties remain quite high. He noted that Indonesian inflation is still at the lower bound of BI's target.

In January 2025, inflation was recorded at only 0.76% year-on-year, the lowest level since 2000, mainly influenced by electricity tariff discounts. However, Riefky warned that inflationary pressures could increase ahead of Ramadan and Idul Fitri.

Furthermore, he assessed that the direction of global monetary policy is still not entirely clear, especially with the slowing aggressiveness of the United States Federal Reserve (The Fed) in monetary easing and the uncertainty of Trump's economic policies.

"The combination of President Trump's policies, the potential for a BI interest rate cut, and the Fed's stance on holding interest rates have influenced rupiah movements in recent weeks," he said.

(Read Katadata: Inflation and Rupiah Remain Stable, BI Maintains Benchmark Interest Rate at 5.75%)