​No: 27/63/DKom 

The Bank Indonesia Board of Governors agreed on 18-19th March 2025 to hold the BI-Rate at 5.75%, while also maintaining the Deposit Facility (DF) rate and Lending Facility (LF) rate at 5.00% and 6.50%, respectively. The decision is consistent with efforts to maintain inflation in 2025 and 2026 within the 2.5±1% target corridor, to maintain the rupiah exchange rate stability in line with economic fundamentals against a backdrop of persistently high global uncertainty and drive economic growth. Moving forward, Bank Indonesia will continue monitoring inflation and the economic growth outlook in terms of considering further room for monetary easing based on Rupiah exchange rate movements. Meanwhile, Bank Indonesia is maintaining pro-growth macroprudential and payment system policies to foster sustainable economic growth. Bank Indonesia has raised the Macroprudential Liquidity Incentive Policy (KLM) to revive bank lending/financing to priority sectors that support growth and job creation in line with the Government's Asta Cita program. Payment system policy is also directed towards bolstering growth, particularly in the trade and MSME sectors, strengthening reliable infrastructure and reinforcing the structure of the payment system industry, while expanding acceptance of payment system digitalisation.

Bank Indonesia has, therefore, strengthened its monetary, macroprudential and payment system policy mix to maintain stability and support sustainable economic growth through the following measures:

1. Strengthening the pro-market monetary operations strategy to enhance monetary policy transmission effectiveness, accelerate money market and foreign exchange market deepening and attract foreign capital inflows by:
1. optimising Bank Indonesia Rupiah Securities (SRBI), Bank Indonesia Foreign Exchange Securities (SVBI) and Bank Indonesia Foreign Exchange Sukuk (SUVBI) as pro-market monetary instruments,
2. strengthening the interest rate structure of monetary instruments to attract portfolio inflows to domestic financial assets,
3. strengthening strategies of term-repo and forex swap transactions, and
4. strengthening the function of Primary Dealers (PD) to increase SRBI transactions in the secondary market and repurchase agreement (repo) transactions between market players.
2. Stabilising the Rupiah in line with economic fundamentals through foreign exchange market intervention with a focus on spot and Domestic Non-Deliverable Forward (DNDF) transactions, as well as government securities (SBN) in the secondary market.
3. Strengthening prime lending rate (PLR) transparency policy with a focus on interest rates by KLM policy priority sector (Appendix).
4. Expanding digital acceptance by:
1. implementing strategies to achieve QRIS targets on the supply and demand sides through synergy with government programs to achieve inclusive growth and improve the efficiency of cross-border retail transactions, and
2. maintaining the momentum of utilising cross-border QRIS collaboration within existing corridors, and
   
5. Strengthening payment system policy support for government programs, which includes expanding the QRIS Cross-Border program at various travel destinations and among inbound international travellers, accompanied by greater financial literacy for Indonesian migrant workers.
   

Bank Indonesia is also strengthening policy coordination with the Government to maintain stability and nurture economic growth in line with the Government's Asta Cita program. Synergy is focused on 7 (seven) policy areas, namely: (i) Rupiah stabilisation policy to mitigate global shocks, (ii) monetary and fiscal policy coordination, (iii) efforts to revive economic financing through KLM policy, (iv) support to accelerate digital transformation within the Government, (v) efforts to strengthen food security and downstreaming, (vi) support to foster development of the green, Islamic and inclusive economy, and (vii) support for the development of human capital. In addition, Bank Indonesia will continue strengthening policy synergy with the Financial System Stability Committee (KSSK) to maintain the stability of the financial system. Meanwhile, Bank Indonesia will also strengthen and expand international cooperation among central banks, including payment system connectivity and local currency transactions (LCT), while promoting trade and investment in priority sectors in synergy with other relevant institutions.

Global uncertainty remains high due to the imposition of sweeping import tariffs by the US Administration. In the United States (US), import tariffs are restraining economic growth as the Government expands fiscal incentives, accompanied by a prolonged disinflation process. The economies of Europe, Japan and India have also been impacted by the spillover effect of US import tariffs against a backdrop of sluggish domestic demand caused by low business confidence and moderating export performance. Meanwhile, subdued economic growth in China in response to the US import tariffs was offset by government policy to raise the fiscal deficit in 2025 beyond the initial target. Consequently, world economic growth in 2025 is forecast at 3.2%. In the global financial markets, uncertainty persists, as characterised by lower US Treasury yields and a weaker DXY index amid prevailing uncertainty concerning the timing and magnitude of further Federal Funds Rate (FFR) reductions. Global capital flows, which had concentrated in the US, have gradually begun shifting to gold and bonds in advanced economies (AE) and developing economies (DE). Meanwhile, portfolio investment remains concentrated in advanced economies, excluding the US, without flowing to emerging markets (EM).  Persistently high global uncertainty demands a strong and coordinated policy response, therefore, to strengthen external resilience, maintain stability and drive domestic economic growth.

Economic growth in Indonesia remains solid, despite persistently high uncertainty. Household consumption remains strong but must still be encouraged to exploit high consumer confidence, fiscal support in the form of a Religious Holiday Allowance and social aid disbursements, coupled with increasing seasonal demand ahead of Eid-ul-Fitr 1446 H. Private investment must also be nurtured to optimise producer confidence, as reflected by an expansionary Prompt Manufacturing Index – Bank Indonesia, particularly in terms of order volume. Externally, non-oil and gas exports increased in February 2025, primarily driven by crude palm oil (CPO) and motor vehicles. By sector, agricultural performance is expected to pick up due to the harvesting season, while the mining sector and manufacturing industry are experiencing moderation due to softer external demand. Consequently, Bank Indonesia forecasts robust domestic economic growth in 2025 in the 4.7-5.5% (yoy) range. Moving forward, Bank Indonesia will continue optimising its policy mix to maintain stability and support sustainable economic growth. This will be realised by optimising macroprudential policy stimuli and accelerating payment system digitalisation by Bank Indonesia in synergy with the fiscal policy stimuli of the Government to revive economic growth. Furthermore, Bank Indonesia fully supports implementation of the Government's Asta Cita program, encompassing economic financing, digitalisation as well as food security and downstreaming efforts.

Indonesia's Balance of Payments (BOP) remains sound, thereby supporting external resilience. A trade surplus was maintained in February 2025 totalling USD3.1 billion after recording a USD3.5 billion surplus in January 2025. Meanwhile, foreign capital inflows to domestic financial instruments for investment improved in March 2025. Foreign capital flows to government securities (SBN) and Bank Indonesia Rupiah Securities (SRBI) in March 2025 (17^th March 2025) recorded net inflows totalling USD0.2 billion and USD0.1 billion, respectively, in response to attractive yields and a promising economic outlook. On the other hand, portfolio equity flows in March 2025 recorded a net outflow of USD0.3 billion, consistent with the performance of regional stock markets. Consequently, portfolio investment in 2025, as of 17^th March 2025, has recorded a net inflow of USD0.8 billion, boosted by inflows to SBN and SRBI. The position of foreign reserves at the end of February 2025 was recorded high at USD154.5 billion, equivalent to 6.6 months of imports or 6.4 months of imports and servicing government external debt, which is well above the international adequacy standard of around 3 months of imports. In 2025, solid BOP performance will be supported by a maintained capital and financial account surplus given attractive yields on investment, accompanied by a manageable current account deficit in the 0.5-1.3% of GDP range.

Rupiah exchange rates remain under control, underpinned by Bank Indonesia's stabilisation policy. Against the US dollar, the Rupiah in March 2025 (as of 18^th March 2025) gained 0.94% (ptp) in value after depreciating 1.69% (ptp) in February 2025, influenced by less foreign capital flowing to regional stock markets, including Indonesia, as a corollary of global uncertainty. Rupiah stability is consistent with Bank Indonesia's stabilisation policy. The rupiah remained relatively stable against a basket of DE) currencies, as major trading partners of Indonesia, and appreciated against the currencies of AE, excluding the US dollar. Moving forward, the Rupiah exchange rate is projected to remain stable in line with Bank Indonesia's firm policy commitment to maintain Rupiah exchange rate stability, together with attractive yields, low inflation and a promising economic growth outlook for Indonesia. Furthermore, Bank Indonesia continues optimising the full panoply of monetary instruments available, which includes strengthening its pro-market monetary operations strategy through the SRBI, SVBI and SUVBI instruments to boost policy effectiveness in terms of attracting portfolio inflows and supporting efforts to strengthen the Rupiah exchange rate.

Consumer Price Index (CPI) inflation remained low in February 2025, thus strengthening economic stability. CPI deflation in February 2025 was recorded at 0.09% (yoy), primarily influenced by the positive impact of government policy to discount electricity rates for households with an installed electrical capacity of ≤2,200VA. Consequently, administered prices (AP) recorded 9.02% (yoy) deflation. On the other hand, core inflation remained under control at a rate of 2.48% (yoy) in line with BI-Rate policy consistency by Bank Indonesia to anchor inflation expectations. Volatile food (VF) inflation moderated to 0.56% (yoy), supported by close synergy to manage inflation between Bank Indonesia and the Central and Regional Government Inflation Control Teams through the National Movement for Food Inflation Control (GNPIP) in various regions. Looking ahead, Bank Indonesia is confident CPI inflation will remain under control and within the 2.5%±1% target corridor. Core inflation is projected to remain manageable in line with anchored inflation expectations, massive economic capacity in response to domestic demand, managed imported inflation in line with Rupiah stabilisation policy by Bank Indonesia, as well as the positive impact of digitalisation. Bank Indonesia also expects volatile food (VF) inflation to remain manageable, underpinned by inflation control synergy between Bank Indonesia and the (central and regional) Government.

Bank Indonesia continues optimising its pro-market monetary operations strategy and instruments to strengthen Rupiah stability and achieve the inflation target. As an integral part of money market and foreign exchange market deepening efforts and to attract foreign capital inflows to domestic financial markets, Bank Indonesia continues optimising its pro-market SRBI, SVBI and SUVBI monetary instruments. As of 17^th March 2025, the respective positions of SRBI, SVBI and SUVBI instruments stood at Rp892.36 trillion, USD2.30 billion and USD320 million. Therefore, non-resident holdings of SRBI totalled Rp232.41 trillion as of 17^th March 2025, accounting for 26.05% of total outstanding. The implementation of Primary Dealers (PD) since May 2024 has also increased SRBI transactions in the secondary market along with repurchase agreement (repo) transactions between market players, thereby strengthening the effectiveness of monetary instruments that support Rupiah stability and inflation control. In addition, Bank Indonesia is also buying SBN in the secondary market to strengthen monetary operations in close synergy with the fiscal policy of the Government. In 2025 (as of 18^th March 2025), Bank Indonesia has purchased SBN to the tune of Rp70.74 trillion, namely through the secondary market totalling Rp47.31 trillion and the primary market totalling Rp23.43 trillion, dominated by treasury bills (SPN), including sharia SPN. Moving forward, Bank Indonesia will continue optimising the various innovations already introduced to strengthen external economic resilience in Indonesia and enhance the effectiveness of monetary policy transmission.

Monetary policy transmission remains effective, primarily to the money market. In line with the BI-Rate reduction implemented in January 2025, and the monetary operations strategy instituted by Bank Indonesia, the IndONIA money market reference rate also trended downwards, namely to 5.79% on 18^th March 2025 from 6.03% at the beginning of January 2025. Despite decreasing, SRBI rates remain attractive to support foreign capital inflows at 6.32%, 6.37% and 6.40% for tenors of 6, 9 and 12 months (as of 14^th March 2025), down from 7.16%, 7.20% and 7.27% at the beginning of January 2025. On the other hand, SBN yields on tenors of 2 years also remained competitive despite decreasing from 6.96% to 6.51%, contrasting the increase recorded on 10-year tenors to 7.00% from 6.98% (as of 18^th March 2025). Meanwhile, ample liquidity has been maintained in the banking industry given the implementation of KLM strengthening efforts and PLR transparency policy, thus maintaining competitive interest rates in the banking industry. In turn, such conditions ultimately improved pricing efficiency in the banking industry, thus boosting new loan disbursements. The 1-month term deposit rate and lending rate were also relatively stable in February 2025 at 4.79% and 9.21%, respectively.

Growth of loans disbursed by the banking industry remains solid, thus supporting economic growth. Credit growth reached 10.30% (yoy) in February 2025, supported by both the supply and demand sides. On the supply side, credit growth is supported by the current bank strategy to reallocate liquid assets to credit growth, massive funding support from positive third-party funds growth since the beginning of 2025 as well as ample liquidity due to the positive impact of Bank Indonesia strengthening KLM policy. As of the second week of March 2025, Bank Indonesia has disbursed KLM incentives totalling Rp291.8 trillion, including Rp125.7 trillion to state-owned banks (BUMN), Rp132.8 trillion to national private commercial banks, Rp27.9 trillion to regional government banks, and Rp5.4 trillion to foreign bank branches. By sector, Bank Indonesia has disbursed incentives to priority economic sectors, namely agriculture, real estate, public housing, construction, trade and manufacturing, transportation, storage, tourism and the creative economy, MSMEs, ultra-micro and green. On the demand side, loan growth is supported by robust corporate sales performance. By loan type, credit growth is primarily supported by investment loans, working capital loans and consumer loans, growing 14.62% (yoy), 7.66% (yoy) and 10.31% (yoy), respectively. Furthermore, sharia financing recorded 9.15% (yoy) growth, while MSME loan growth stood at 2.51% (yoy) in the reporting period. Moving forward, Bank Indonesia will continue driving credit growth through various accommodative macroprudential policies in pursuit of economic growth, which includes optimising the latest increase to KLM incentives from a maximum of 4% to 5% of deposits, effective from 1^st April 2025. The 1% increase will nurture bank lending/financing to priority sectors that support growth and job creation in line with the Government's Asta Cita program.

Banking industry resilience remains solid, thereby strengthening financial system stability. Bank liquidity remained adequate in February 2025, as reflected by a high ratio of liquid assets to third-party funds (LA/TPF) at 26.32%. The Capital Adequacy Ratio (CAR) also remained high in January 2025 at 27.01%, supported by low non-performing loans (NPL), as a proxy of credit risk, as indicated by NPL ratios of 2.18% (gross) and 0.79% (nett). Overall, the latest BI stress tests indicate solid banking industry resilience against various risks, supported by maintained corporate repayment capacity and profitability. In addition, Bank Indonesia will continue strengthening policy synergy with the KSSK Committee to mitigate various risks that could potentially disrupt banking industry resilience and financial system stability.

Digital economic and financial transactions continued growing in February 2025, supported by secure, seamless and reliable payment systems. Digital payments^[1] grew 31.21% (yoy) to reach 3.38 billion transactions in February 2025, supported by all components. Transaction volume through mobile banking applications grew 32.22% (yoy), with the volume of transactions via internet banking similarly growing by 16.51% (yoy) in February 2025. In addition, digital payment transaction volume through QRIS continued to enjoy impressive 163.32% (yoy) growth, supported by increasing numbers of users and merchants. From an infrastructure perspective, the volume of retail transactions processed through BI-FAST grew 75.82% (yoy) to reach 330.08 million transactions, with a value of Rp 858.27 trillion in February 2025. On the wholesale or high-value side, the BI-RTGS system processed 807.18 thousand transactions, up 4.66% (yoy), with a transaction value of Rp14,749.90 trillion in February 2025. In terms of Rupiah currency management, total currency in circulation grew 9.79 % (yoy) to Rp1,112.22 trillion in February 2025.

Payment system stability has been maintained, supported by stable infrastructure and a sound industry structure. In terms of the infrastructure, payment system stability is reflected in the seamless and reliable payment system maintained by Bank Indonesia, along with an adequate money supply of currency fit for circulation in February 2025. Regarding the structure of the payments industry, payment system interconnection and the digital economy and finance ecosystem continue to expand. Payment transactions based on the National Open API Payment Standard (SNAP) continue to grow as SNAP adoption among various industry players expands. Meanwhile, Bank Indonesia will continue ensuring the availability, reliability and security of the payment systems operated by Bank Indonesia and the industry, which includes monitoring the system reliability of payment system service providers during the Ramadan and Eid-ul-Fitr festive period. Furthermore, Bank Indonesia will ensure adequate availability of Rupiah currency fit for circulation in suitable denominations throughout all regions of the Republic of Indonesia, particularly in frontier, outermost and underdeveloped regions, especially during the Ramadan and Eid-ul-Fitr festive period through the Semarak Rupiah Ramadhan and Berkah Idul Fitri (SERAMBI) 2025 program.

Jakarta, 19^th March 2025

Communication Department

Ramdan Denny Prakoso

Executive Director

^[1] Digital payments include transactions through mobile applications and the internet.