No. 27/194/DKom
The Bank Indonesia Board of Governors decided on 19-20th August 2025 to lower the BI-Rate by 25 bps to 5.00%, while also lowering the Deposit Facility (DF) rate by 25 bps to 4.25% and the Lending Facility (LF) rate by 25 bps to 5.75%. The decision is consistent with projections of decreasing inflation in 2025 and 2026 within the 2.5±1% target corridor, maintained rupiah exchange rate stability in line with economic fundamentals and the need to drive economic growth commensurate with economic capacity. Moving forward, Bank Indonesia will continue considering further room for interest rate reductions to strengthen economic growth given projections of lower inflation, while maintaining rupiah exchange rate stability. Meanwhile, Bank Indonesia continues optimising accommodative macroprudential policy to revive lending/financing, lower interest rates and increase liquidity in the banking industry in pursuit of higher economic growth. Payment system policy is also oriented towards supporting economic growth by expanding the acceptance of digital payments, while strengthening the structure of the payment system industry and strengthening the resilience of payment system infrastructure.
Bank Indonesia has, therefore, strengthened its monetary, macroprudential and payment system policy mix to maintain stability and strengthen sustainable economic growth through the following policy measures:
- Strengthening the pro-market monetary operations strategy to enhance the effective transmission of lower interest rates, increase liquidity, accelerate money market and foreign exchange market deepening and attract foreign capital inflows by:
- strengthening the effective transmission of lower interest rates by managing the interest rate structure of monetary instruments and forex swaps by maintaining the attractiveness of portfolio inflows to domestic financial assets,
- maintaining adequate liquidity in the money market and banking industry through Bank Indonesia Rupiah Securities (SRBI) auctions in a measured manner and purchasing government securities (SBN) in the secondary market, and
- strengthening the function of Primary Dealers (PD) to increase Bank Indonesia Rupiah Securities (SRBI) transactions in the secondary market and repurchase agreement (repo) transactions between market players.
- Strengthening the rupiah stabilisation strategy in line with economic fundamentals, primarily through domestic foreign exchange market intervention with a focus on spot and domestic non-deliverable forward (DNDF) transactions as well as intervention in offshore non-deliverable forward (NDF) transactions, while also purchasing government securities (SBN) in the secondary market to increase liquidity and maintain financial market stability.
- Strengthening prime lending rate (PLR) transparency assessment with a focus on interest rates based on priority sectors in accordance with the scope of Macroprudential Liquidity Incentive Policy (KLM) policy (Appendix).
- Expanding digital acceptance by: (i) strengthening awareness among users and merchants concerning the implementation of QRIS Cross-Border cooperation with Japan for the outbound Indonesian corridor, (ii) developing QRIS Cross-Border cooperation with Japan for the inbound Indonesian corridor and preparing for the implementation of QRIS Cross-Border cooperation with China, and (iii) expanding implementation of QRIS Tap by increasing digital adoption in various sectors and regions, and
- Strengthening and expanding 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 relevant institutions.
Bank Indonesia is also strengthening policy synergy with the Government to maintain stability and nurture economic growth in line with the Government's Asta Cita program. In addition, Bank Indonesia will continue strengthening policy synergy with the Financial System Stability Committee (KSSK) to maintain the stability of the financial system.
The global economy is moderating as the United States (US) expands implementation of reciprocal import tariffs. On 7th August 2025, the US expanded the scope of its reciprocal import tariffs from 44 to 70 countries, with tariffs imposed on certain countries, including India and Switzerland, higher than originally announced. The implementation of reciprocal import tariffs poses the emerging risk of further global economic moderation. Bank Indonesia forecasts potentially lower economic growth in 2025 than the previous projection of around 3.0%. In the US, the economic growth outlook is expected to be lower in response to weaker domestic demand. India's economy is also weakening due to the impact of higher tariffs, thereby restraining export performance and the manufacturing sector. Meanwhile, the economies of Europe, Japan and China are expected to improve as a corollary of lower tariff agreements and fiscal support. Lower growth, coupled with disinflation, has pushed most central banks to favour accommodative monetary policy, excluding Japan. Milder inflationary pressures in the US are strengthening expectations of a future reduction in the Federal Funds Rate (FFR). In the near term, however, global financial market uncertainty persists, thus demanding vigilance to maintain domestic economic resilience against the impact of global spillovers.
Economic growth in Indonesia exceeded projections in the second quarter of 2025. Second-quarter growth in 2025 was recorded at 5.12% (yoy), up from 4.87% (yoy) in the first quarter of 2025. Stronger economic performance was supported by investment in line with positive capital investment growth and household consumption as community mobility increased. Exports of goods and services also increased due to the front-loading of exports bound for the US in anticipation of tariffs, accompanied by an influx of inbound international travellers. By sector, broad-based gains were recorded across all economic sectors, including the manufacturing industry, trade, as well as information and communication. Spatially, economic growth in all regions accelerated, led by the Java region. Economic growth is forecast to improve in the second semester of 2025, underpinned by positive export performance and increasing domestic demand in line with expansionary fiscal spending. Following the gains recorded in the second quarter of 2025, economic growth overall in 2025 is forecast above the midpoint of the 4.6-5.4% range. Bank Indonesia will continue strengthening policy coordination and synergy with the Government to accelerate economic growth in line with national economic capacity. To that end, government spending, including through the implementation of priority programs, will help boost domestic economic activity. Furthermore, Bank Indonesia will continue optimising its monetary, macroprudential and payment system policy mix to drive economic growth in line with low inflation and maintained rupiah stability.
Indonesia's Balance of Payments (BOP) remains sound, thereby supporting external resilience. In the second quarter of 2025, the current account deficit is projected to remain low and manageable, bolstered by a goods trade surplus recorded at USD4.1 billion in June 2025 due to exports of natural resources and manufacturing products. In the third quarter of 2025, portfolio investment inflows to government securities (SBN) have been maintained, with net inflows totalling USD1.0 billion recorded in July and August 2025 (as of 15th August 2025). Net inflows observed in August 2025 indicate early signs of positive stock market performance in line with the promising economic outlook and lower interest rates in Indonesia. The position of foreign reserves at the end of July 2025 remained high at USD152.0 billion, equivalent to 6.3 months of imports or 6.2 months of imports and servicing government external debt, which is well above the international adequacy standard of around 3 months of imports. Bank Indonesia projects solid BOP performance in 2025, supported by a narrow current account deficit in the range of 0.5% to 1.3% of GDP, accompanied by a maintained capital and financial account surplus despite persistently high global uncertainty .
Rupiah exchange rates remain stable, while tracking an appreciating trend on the back of Bank Indonesia's stabilisation policy and maintained foreign capital inflows. The value of the rupiah against the US dollar in August 2025 (as of 19th August 2025) appreciated by 1.29% (ptp) compared with the level recorded at the end of July 2025. The latest exchange rate developments were supported by consistent stabilisation policy instituted by Bank Indonesia, maintained foreign capital inflows, primarily to SBN instruments, and the increasing conversion of foreign exchange into rupiah by exporters after the Government strengthened policy concerning the foreign exchange proceeds of exports of natural resources (DHE SDA). Moving forward, Bank Indonesia expects the rupiah to remain stable and gain value, underpinned by Bank Indonesia's commitment to maintain rupiah stability, alongside attractive yields, low inflation and the positive economic growth outlook for Indonesia. Furthermore, Bank Indonesia continues strengthening its stabilisation policy response, including measured intervention in offshore NDF markets and triple intervention strategy with a focus on spot and DNDF transactions, while also purchasing SBN in the secondary market. Bank Indonesia also continues optimising the full panoply of monetary instruments available, which includes strengthening its pro-market monetary operations strategy through the Bank Indonesia Rupiah Securities (SRBI), Bank Indonesia Foreign Exchange Securities (SVBI) and Bank Indonesia Foreign Exchange Sukuk (SUVBI) instruments, to boost policy effectiveness in terms of attracting portfolio inflows and supporting rupiah exchange rate stability.
Low Consumer Price Index (CPI) inflation was maintained in July 2025, thereby bolstering economic stability. CPI inflation in July 2025 was recorded low at 2.37% (yoy), underpinned by lower administered prices (AP) inflation and manageable volatile food (VF) inflation. Core inflation fell to 2.32% (yoy) as a result of monetary policy consistency to anchor inflation expectations to the target corridor, accompanied by low imported inflation and international food prices. VF inflation remained under control at 3.82% (yoy), supported by the adequate supply of key food commodities and close synergy to manage inflation between Bank Indonesia and the Central and Regional Government Inflation Control Teams (TPIP/TPID) through the National Movement for Food Inflation Control (GNPIP). Meanwhile, AP inflation decelerated to 1.32% (yoy). Looking ahead, Bank Indonesia is confident that CPI inflation will remain under control and within the 2.5%±1% target corridor in 2025 and 2026. Core inflation is projected to remain manageable in line with anchored inflation expectations, adequate economic capacity, managed imported inflation, as well as the positive impact of digitalisation. Bank Indonesia also expects VF inflation to remain manageable, supported by inflation control synergy between Bank Indonesia and the central and regional Government.
Bank Indonesia continues optimising its pro-market monetary operations strategy to strengthen transmission of the lower BI-Rate to interest rates in the money market and banking industry. BI-Rate reductions totalling 100 bps since September 2024 have been accompanied by lower interest rates in the money market, with further measures required to continue lowering interest rates in the banking industry. In the money market, consistent with the BI-Rate reduction implemented in July 2025 and the monetary operations strategy instituted by Bank Indonesia, the IndONIA money market reference rate also trended downwards to 4.78% on 19th August 2025 from 5.14% prior to the BI-Rate reduction announced in July 2025. Meanwhile, SRBI rates for tenors of 6, 9 and 12 months, as of 15th August 2025, also tracked downward trends, namely from 5.85%, 5.86% and 5.87% before the BI-Rate reduction in July 2025 to 5.28%, 5.32% and 5.34%. On the other hand, SBN yields on tenors of 2 years decreased from 5.86% to 5.54%, while yields on 10-year tenors retreated from 6.56% to 6.40%. Similarly, the 1-month term deposit rate began tracking a downward trend, namely from 4.85% in June 2025 to 4.75% in July 2025. Meanwhile, lower lending rates in the banking industry continue to experience a lag. In July 2025, lending rates in the banking industry stood at 9.16%, relatively unchanged from the previous month. Moving forward, Bank Indonesia acknowledges a further opportunity for the banking industry to lower interest rates and increase financing to support stronger economic growth.
Bank Indonesia continues optimising its pro-market monetary operations strategy to support adequate liquidity in the money market and banking industry. To that end, Bank Indonesia has continued reducing the auction volume of SRBI, accompanied by a lower SRBI position. As of 15th August 2025, the position of SRBI was recorded at Rp720.01 trillion, down from Rp916.97 at the beginning of January 2025. Seeking to expand liquidity, Bank Indonesia also focused monetary operations on shorter tenors. 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. Meanwhile, the respective positions of SVBI and SUVBI instruments, as of 15th August 2025, stood at USD4.56 billion and USD460 million. In addition, Bank Indonesia is also buying SBN in the secondary market to strengthen monetary policy to expand liquidity, while simultaneously reflecting close synergy with the fiscal policy of the Government. In 2025 (as of 19th August 2025), Bank Indonesia has purchased SBN to the tune of Rp186.06 trillion, through the secondary market totalling Rp137.80 trillion and the primary market totalling Rp48.26 trillion in treasury bills (SPN), including sharia SPN. Moving forward, Bank Indonesia will continue optimising its pro-market monetary operations strategy to increase liquidity and boost the effectiveness of monetary policy transmission in pursuit of economic growth by achieving the inflation target and maintaining rupiah exchange rate stability.
Loans disbursed by the banking industry must be increased to support economic growth. Credit growth in July 2025 was recorded at 7.03% (yoy), down from 7.77% (yoy) in June 2025. On the supply side, amid policy rate reductions, ample liquidity and the macroprudential policy incentives instituted by Bank Indonesia, bank prudence when disbursing loans was reflected by higher lending standards, among others. Consequently, the banking industry continued investing its additional liquidity in securities. Loose liquidity conditions in the banking industry were also supported by faster growth of third-party funds (TPF), accelerating to 7.00% (yoy) in July 2025 in line with fiscal expansion. On the demand side, the main contributors to credit growth were export-oriented sectors, particularly mining and plantation crops, alongside transportation, manufacturing and social services. Overall, moderating credit growth reflects sluggish demand from businesses, which tend to favour internal funds for business expansion. By loan type, growth of investment loans and working capital loans remains sluggish at 8.11% (yoy) and 3.08% (yoy), contrasting solid 12.42% (yoy) growth of investment loans in line with strong investment growth. On the other hand, sharia financing recorded 8.31% (yoy) growth, while MSME loan growth remained low at 1.82% (yoy) in the reporting period. Moving forward, Bank Indonesia will continue nurturing bank lending, which includes through accommodative macroprudential policies and strengthening coordination with the Financial System Stability Committee (KSSK). Overall, Bank Indonesia projects growth of loans disbursed by the banking industry in 2025 in the 8-11% range.
Bank Indonesia will strengthen the implementation of Macroprudential Liquidity Incentive Policy (KLM) to revive bank lending/financing. As of the first week of August 2025, Bank Indonesia disbursed KLM incentives totalling Rp384 trillion, with Rp171.5 trillion allocated to state-owned banks, Rp169.2 trillion to national private commercial banks, Rp37.2 trillion to regional government banks and Rp5.7 trillion to foreign bank branches. By sector, the incentives were primarily disbursed to priority sectors, namely agriculture, real estate, public housing, construction, trade and manufacturing, transportation, storage, tourism and the creative economy, as well as the MSME, ultra micro and green sectors. Moving forward, Bank Indonesia will continue strengthening KLM to revive bank lending/financing by optimising the incentives for sectors with a high contribution to economic growth and job creation in line with the Government's Asta Cita program.
Banking industry resilience remains solid, thereby strengthening financial system stability. Bank capital remains high, accompanied by ample liquidity and low credit risk. The Capital Adequacy Ratio (CAR) in June 2025 stood at 25.81%, adequate to absorb risk. Meanwhile, ample liquidity was reflected by a 27.08% ratio of liquid assets to third-party funds (LA/TPF) in July 2025. This was supported by low non-performing loans (NPL), as a proxy of credit risk, as indicated by NPL ratios of 2.22% (gross) and 0.84% (nett) in June 2025. The latest BI stress tests indicate solid banking industry resilience, supported by maintained corporate repayment capacity and profitability. Moving forward, Bank Indonesia will continue strengthening policy synergy with the KSSK Committee to mitigate various domestic and global economic risks that could potentially disrupt financial system stability.
Digital economic and financial transactions remained solid in July 2025, supported by secure, seamless and reliable payment systems. Digital payments[1] in July 2025 grew 45.30% (yoy) to reach 4.44 billion transactions, supported by all components. Transaction volume through mobile and internet banking applications grew 26.07% (yoy) and 12.68% (yoy), respectively, including digital payment transaction volume through QRIS, which continued enjoying impressive 162.77% (yoy) growth, supported by increasing numbers of users and merchants. From an infrastructure perspective, the volume of retail transactions processed through BI-FAST grew 37.56% (yoy) to reach 414.62 million transactions, with a value of Rp1,016.48 trillion in July 2025. On the wholesale or high-value side, the BI-RTGS system processed 959.32 thousand transactions in July 2025, with a transaction value of Rp19,791.94 trillion. In terms of rupiah currency management, total currency in circulation grew 9.68% (yoy) to Rp1,141.83 trillion in July 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 systems maintained by Bank Indonesia, along with an adequate money supply of currency fit for circulation in appropriate denominations in July 2025. A healthy payments industry structure is reflected by increasing payment system interconnection, accompanied by the continued expansion of the digital economy and finance ecosystem. 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 retail and wholesale payment systems operated by Bank Indonesia and the industry. Furthermore, Bank Indonesia will safeguard the adequate availability of rupiah currency fit for circulation in suitable amounts throughout all regions of the Republic of Indonesia, particularly in frontier, outermost and remote regions.
Jakarta, 20th August 2025|
Communication Department
Junanto Herdiawan
Executive Director
[1] Digital payments include transactions through mobile applications and the internet.
