Indonesian Macro Update - BI Rate Update 18 Dec 2025
KBVS MACRO UPDATE
Thursday, 18 December 2025
Bank Indonesia Maintains a Stability-First Policy Stance
Bank Indonesia (BI) once again demonstrated a stability-over-growth policy orientation at its latest Board of Governors’ Meeting by keeping the BI Rate unchanged at 4.75%. As a result, the interest rate differential between the Federal Funds Rate and the BI Rate remains preserved at around 100 bps.
Nevertheless, BI continues to signal that there remains room for a potential policy rate cut going forward. At the same time, we anticipate potential anomalies in global capital flows in the near term and keeping the rupiah under pressure.
Combined with rising inflation risks, heightened short-term banking sector vulnerabilities, and a potentially prolonged domestic economic recovery due to natural disasters and precautionary fiscal behavior, these factors reinforce BI’s preference for a cautious and stability-oriented policy approach in the near term.
Regards,
Fikri C Permana – KBVS Research Team