
BI Cuts Rates Amidst Global Uncertainty, Targeting Economic Growth
BI 7-day Repo Rate: 5.75%
Deposit Facility: 5.00%
Lending Facility: 6.50%
The Bank of Indonesia (BI) Board of Governors meeting cut the interest rate by 25 bps to 5.75%, with the Deposit Facility rate at 5.00% and the Lending Facility rate at 6.50% on January 15, 2025. This move aims to support Indonesia’s economic growth target. Additionally, it ensures inflation remains within the 2.5±1% target for 2025 and 2026. BI also focuses on maintaining pro-market stability for the Rupiah exchange rate through open market operations in the Spot market, Domestic Non-Deliverable Forward (DNDF), and Government Securities (SBN) in the secondary market. The interest rate reduction was influenced by global factors, including decreased uncertainty in Trump administration policies, namely a 7.7% fiscal deficit, and anticipation of the impact of rising US Treasury Yield (UST) 10-year rates. BI also forecasts only one cut rate 25 bps in the Fed Fund Rate (FFR) in 2025, affecting the Dollar Index (DXY) movement. In domestic factor, recent data shows Indonesia’s inflation rate is lower than BI’s target. Furthermore, BI considers the exchange rate relatively stable and aligned with Indonesia’s economic fundamentals. Lastly, BI projects lower economic growth for Indonesia in 2025 than previously estimated.
By PHINTRACO SEKURITAS | Research
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