Indonesia's Central Bank Holds Interest Rate at 5.75% in March 2025 to Stabilize Rupiah

Following the Governor's Board Meeting (RDG) on March 18-19, 2025, Bank Indonesia (BI) decided to maintain the benchmark interest rate, the *BI 7-Day Reverse Repo Rate* (BI7DRR), at 5.75%.

Consequently, the deposit facility interest rate remains at 5%, and the lending facility interest rate remains at 6.5%.

In a written statement, BI stated that this decision is consistent with efforts to keep the projected inflation for 2025 and 2026 under control within the target of 2.5% plus or minus 1%.

Furthermore, maintaining the interest rate aims to safeguard the stability of the Rupiah exchange rate amid persistent high global uncertainty and to support economic growth.

"Going forward, Bank Indonesia will continue to monitor inflation and economic growth prospects in utilizing the room for BI-Rate reduction while considering the movement of the Rupiah exchange rate," BI wrote on its website on Wednesday (March 19, 2025).

(Read also: [BI Benchmark Interest Rate Remains at 5.75% in February 2025](https://databoks.katadata.co.id/keuangan/statistik/67b5cd6f74aaf/suku-bunga-acuan-bi-ajek-di-level-575-pada-februari-2025))

BI's stance had been previously projected by several economists. Josua Pardede, Chief Economist of Bank Permata, explained to *Katadata* that this BI move is due to the still considerable global uncertainty.

However, Josua stated that the market currently anticipates a larger cut in the US Federal Reserve's benchmark interest rate because US inflation data shows a decline.

In addition, the Institute for Economic and Community Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), also revealed that there are still external risks to be anticipated.

Teuku Riefky, a researcher in macroeconomics and financial markets at LPEM FEB UI, explained that the current direction of The Fed's policy is also one of BI's considerations in formulating its policy. The announcement of The Fed's meeting results coincided with BI's RDG.

Riefky stated that the market expects The Fed to also maintain its interest rate. Therefore, Riefky projects that BI will still maintain its interest rate.

"Because a reduction in interest rates by Bank Indonesia could put additional pressure on the Rupiah," said Riefky.

(Read *Katadata*: [BI Holds Interest Rate at 5.75% to Protect Rupiah Amidst Financial Market Volatility](https://katadata.co.id/finansial/makro/67da76a68445d/bi-tahan-suku-bunga-5-75-demi-jaga-rupiah-di-tengah-gejolak-pasar-keuangan))