Indonesia Interest Rate

The Bank of Indonesia maintained its benchmark interest rate at 6% during its December 2024 meeting, aligning with market expectations. This decision reflected the central bank's commitment to keeping inflation under control within the target range of 2.5% ± 1% for 2024 and 2025, as well as stabilizing the Rupiah amid heightened global uncertainties. Indonesia's annual inflation rate eased to 1.55% in November 2024 from 1.71% in the previous month, marking its lowest level since July 2021 and remaining comfortably within the target range. Meanwhile, the Rupiah depreciated by 1.37% (as of December 17, 2024) compared to the previous month, weighed down by rising global uncertainties, such as the US policy path, limited room for FFR cuts, broad-based US dollar strengthening, and geopolitical risks that shifted global investor preference back to US assets. The overnight deposit and lending facility rates were also held steady at 5.25% and 6.75%, respectively.

The Bank of Indonesia maintained its interest rate at 6% during its November 2024 meeting, as widely expected. This decision aims to bolster the stability of the Rupiah in response to rising geopolitical and global economic uncertainties, particularly developments in the United States. It also seeks to ensure that inflation remains within the target range of 2.5±1% for 2024 and 2025, while supporting sustainable economic growth. The Rupiah depreciated by 0.84% month-on-month, driven primarily by the widespread strengthening of the U.S. dollar and a global shift in investor preferences toward U.S. assets following the outcomes of the U.S. elections. Meanwhile, Indonesia’s annual inflation rate eased to 1.71% in October 2024 from 1.84% in the previous month. This marked the lowest reading since October 2021 and remained well within the central bank’s target range. The overnight deposit and lending facility rates were also held at 5.25% and 6.75%, respectively.

The Bank of Indonesia kept its interest rate at 6% during its October 2024 meeting to ensure that inflation moves towards its target of 2.5% ± 1% for 2024-2025 while supporting economic growth, and matching market expectations. This decision followed a surprise 25 bps reduction in September, the first cut in borrowing costs since January 2021. Governor Perry Warjiyo said the decision was influenced by rising global market uncertainties. He added that the BI will continue to assess the possibility of further rate cuts, considering the country's inflation, Rupiah stability, and growth outlook. The annual inflation rate fell to a near three-year low of 1.84% in September, within the BI's target range of 2.5% ± 1%. Meanwhile, the Rupiah depreciated by 2.82% in October 2024 (as of October 15, 2024). Additionally, the central bank maintained its economic growth forecast at around 4.7-5.5% for this year. The overnight deposit and lending facility rates were also held at 5.25% and 6.75%, each.