Indonesia CB resumes monetary easing to support slowing economy

Indonesia’s central bank cut its key interest rate on Wednesday as the market expected, resuming its monetary easing to support the slowing economy after pressure on the rupiah receded.

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Bank Indonesia (BI) lowered the benchmark 7-day reverse repurchase rate, known as the BI Rate, by 25 basis points to 5.50 per cent, as expected by 20 of 32 economists polled by Reuters. It also cut two other policy rates by the same amount.

“This decision is consistent with the forecast of low and manageable inflation in 2025 and 2026 within target to maintain the stability of the rupiah in accordance with its fundamentals, and to contribute to economic growth,” Governor Perry Warjiyo told a press conference in Jakarta.

He said growth needed to be strengthened to mitigate the impact of US tariffs, and policies needed to support household demand and exports.

Southeast Asia's largest economy grew an annual 4.87 per cent in the first quarter, its weakest pace in more than three years.