The BI Board of Governors Meeting agreed on 15-16th October 2024 to hold the BI-Rate at 6.00%, while also maintaining the Deposit Facility (DF) rate and Lending Facility (LF) rate at 5.25% and 6.75%, respectively. The decision is consistent with the direction of monetary policy to control inflation in 2024 and 2025 within the 2.5 ±1% target corridor, while supporting sustainable economic growth. The focus of monetary policy in the near term is on Rupiah stability in response to increasing global financial market uncertainty. Moving forward, Bank Indonesia will continue to watch room of monetary easing, considering the prospect of inflation, exchange rate and economic growth. Bank Indonesia maintains pro-growth macroprudential and payment system policies to foster sustainable economic growth. Bank Indonesia will hold an accommodative macroprudential policy stance to revive bank lending/financing to priority sectors and create job opportunities, including the MSME sector and green economy, while maintaining prudential principles. Payment system policy is 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 (MO) strategy to maintain foreign capital inflows to enhance monetary policy effectiveness in terms of Rupiah stabilisation by:

   1. Maintaining the interest rate structure of the Rupiah money market to maintain attractive yields and increase portfolio inflows to domestic financial assets for investment.
   2. Optimising Bank Indonesia Rupiah Securities (SRBI), Bank Indonesia Foreign Exchange Securities (SVBI) and Bank Indonesia Foreign Exchange Sukuk (SUVBI).
   3. Strengthening strategies to maintain competitive term-repo and forex swap transactions, and
   4. Strengthening the function of Primary Dealer (PD) to increase SRBI transactions in the secondary market and repurchase agreement (repo) transactions between market players.

2. Stabilising the Rupiah 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 the implementation of accommodative macroprudential policy to revive lending/financing and support sustainable economic growth, while maintaining financial system stability by:

   1. Strengthening the Macroprudential Liquidity Incentive (KLM) Policy to revive bank lending/financing to business sectors and create job opportunities,
   2. Holding: (i) the Countercyclical Capital Buffer (CCyB) at 0%, (ii) Macroprudential Intermediation Ratio (MIR) in the 84-94% range, (iii) Loan/Financing-to-Value (LTV/FTV) ratio on property loans/financing up to a maximum of 100% and downpayment requirements on automotive loans/financing down to a minimum of 0%, effective from 1st January until 31st December 2025, and (iv) Macroprudential Liquidity Buffer (MPLB) at 5% with repo flexibility of 5% and the Sharia MPLB at 3.5% with repo flexibility of 3.5%.

4. Strengthening prime lending rate (PLR) transparency policy with a focus on interest rates by KLM priority sectors (Appendix).

5. ​Expanding the acceptance of payment system digitalisation by applying a QRIS Merchant Discount Rate (MDR) of 0% for transactions up to Rp500,000 at micro merchants (UMI), commencing 1st December 2024, to strengthen public purchasing power among the lower-middle class.

Policy coordination between Bank Indonesia and the Government is also constantly strengthened to maintain stability and strengthen economic growth. Policy coordination with the (central and regional) Government is strengthened through the National Movement for Food Inflation Control (GNPIP) in various regions within the Central Government and Regional Government Inflation Control Teams (TPIP and TPID). Monetary and fiscal policy coordination is also strengthened to maintain macroeconomic stability and bolster economic growth momentum. Furthermore, policy synergy between Bank Indonesia and the Financial System Stability Committee (KSSK) is also strengthened to maintain financial system stability and revive bank lending/financing to businesses. Bank Indonesia is strengthening and expanding international cooperation among central banks, including through payment system connectivity and local currency transactions (LCT), as well as promoting investment and trade in priority sectors in synergy with relevant institutions. 

Global financial market uncertainty reemerges amid monetary policy convergence among advanced economies. Geopolitical tensions in the Middle East have heightened global financial market uncertainty. Global growth in 2024 is projected at 3.2% with a moderating trend. Global inflation is falling, thus precipitating monetary policy convergence, particularly in Advanced Economies. In the United States (US), the latest unemployment data shows improvements, accompanied by the prospect of lower inflation, thus fueling market expectations of lower Federal Funds Rate (FFR) cuts than previously expected. This triggered higher US Treasury yields for 2-year and the benchmark 10-year tenors, as well as the DXY Index. Moving forward, the current trend of lower policy rates in advanced economies, particularly the US, is expected to persist, despite the ongoing need for vigilance due to the dynamics of geopolitical tensions.. These developments require prudence when formulating an optimal policy response to mitigate the impact of global spillovers, which includes attracting foreign capital inflows and strengthening exchange rate stability to maintain stability and support economic.

At home, economic growth in Indonesia remains sound, with efforts required to accelerate growth.  Economic growth in the third quarter of 2024 was supported by domestic demand. Investment remains solid, particularly building investment in line with the completion of several national strategic projects. Household consumption, particularly among the upper-middle class, has been maintained. Non-oil and gas exports recorded positive growth despite global economic moderation and low international commodity prices. By sector, growth was supported by the Manufacturing Industry, Construction, as well as Retail and Wholesale Trade. Spatially, economic performance has been maintained in all regions. In the fourth quarter of 2024, economic growth is projected to remain solid on the back of higher investment and improving household consumption, coupled with an uptick in government expenditures towards the end of the year. Overall, Bank Indonesia projects economic growth in 2024 in the 4.7-5.5% range before accelerating in 2025. Moving forward, various efforts must be maintained to nurture growth from the demand and supply sides. To that end, Bank Indonesia will continue strengthening its policy mix to accelerate economic growth in close synergy with the fiscal stimuli implemented by the Government. On the supply side, structural reforms must be strengthened to boost sectors with high labour absorption. Such efforts will be supported by optimising macroprudential policy stimuli and accelerating the digitalisation of payments implemented by Bank Indonesia. 

Indonesia's Balance of Payments (BOP) remains sound, thereby supporting external stability. The BOP in the third quarter of 2024 is projected to record a surplus given the non-oil and gas trade surplus, which was maintained at USD6.5 billion. Meanwhile, portfolio inflows remain high, recording a net inflow of USD11.6 billion (qtd) in the third quarter of 2024. The net inflow of portfolio investment has been sustained in the fourth quarter of 2024, recorded at USD0.6 billion (qtd) as of 14th October 2024. Furthermore, the position of foreign reserves at the end of September 2024 stood at USD149.9 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. Moving forward, BOP performance in 2024 is forecast to improve on the previous projection in line with a larger capital and financial account surplus, supported by an influx of foreign capital inflows in response to attractive yields on financial assets for investment. Meanwhile, the current account deficit will remain low and manageable in the 0.1%-0.9% of GDP range. In 2025, BOP performance it is expected to remain solid given the promising domestic economic outlook and manageable current account deficit. 

Rupiah stability has been maintained in line with the policy commitments implemented by Bank Indonesia. The Rupiah in October 2024 (as of 15th October 2024) depreciated 2.82% (ptp) on the previous month, primarily due to increasing global uncertainty triggered by escalating geopolitical tensions in the Middle East. Compared to the level recorded at the end of December 2023, however, the Rupiah has only depreciated by 1.17%, compared with 4.25%, 4.58% and 5.62% for the Philippine peso, Taiwan dollar and Korean won, respectively. Moving forward, the Rupiah exchange rate is projected to remain stable in line with attractive yields, low inflation and the promising economic growth outlook for Indonesia, as well as Bank Indonesia's firm policy commitments to maintain economic stability. 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 foreign capital inflows and supporting efforts to strengthen the Rupiah exchange rate. 

Consumer Price Index (CPI) inflation went down in September 2024 and was maintained within the 2.5±1% target corridor.  Low Consumer Price Index (CPI) inflation was recorded in September 2024 at 1.84% (yoy), influenced by all components. Core inflation was recorded at 2.09% (yoy), while volatile food inflation continued falling to 1.43% (yoy). Lower volatile food inflation was supported by increasing food supply during the ongoing harvesting season, close synergy to manage inflation between the TPIP/TPID teams through the GNPIP movement, and the base effect of food prices. Moving forward, Bank Indonesia is confident that CPI inflation will remain under control and within the target corridor. Core inflation is projected to remain manageable in line with anchored inflation expectations, massive economic capacity in response to domestic demand, low imported inflation in line with Rupiah stability by Bank Indonesia, as well as the positive impact of digitalisation. Bank Indonesia also expects volatile food inflation to remain manageable, underpinned by inflation control synergy between Bank Indonesia and the (central and regional) Government. Furthermore, Bank Indonesia remains committed to strengthening monetary policy effectiveness to maintain inflation in 2024 and 2025 within the 2.5±1 % target range, while continuing to support efforts to strengthen economic growth. 

Bank Indonesia continues optimising various pro-market monetary instruments, namely SRBI, SVBI and SUVBI, to strengthen Rupiah stability and achieve the inflation target. This policy also aims to accelerate money market deepening efforts and attract foreign capital inflows. As of 14th October 2024, the respective positions of SRBI, SVBI and SUVBI instruments stood at Rp934.87 trillion, USD3.38 billion and USD424 million. SRBI issuances have attracted portfolio inflows to Indonesia and strengthened the Rupiah, as reflected by significant non-resident holdings of SRBI totalling Rp254.57 trillion (27.23% of total outstanding). The implementation of Primary Dealer (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. Moving forward, Bank Indonesia will continue optimising its various innovative pro-market instruments in terms of volume and attractive yields, strengthened by solid economic fundamentals, in pursuit of further portfolio inflows to domestic financial markets. 

Monetary policy transmission remains effective. The IndONIA money market reference rate is still moving within the BI-Rate range, recorded at 6.16% on 15th October 2024. SRBI rates remain attractive at 6.69%, 6.79% and 6.84% for tenors of 6, 9 and 12 months, respectively, as of 11th October 2024. SBN yields on tenors of 2 years decreased to 6.31%, as of 15th October 2024, while SBN yields on tenors of 10 years increased to 6.67% in line with the higher benchmark 10-year UST yield. Meanwhile, liquidity in the banking industry remains ample in line with implementation of the Bank Indonesia policy mix, including KLM. Adequate liquidity and pricing efficiency in the banking industry are consistent with PLR transparency policy, which has had a positive impact on competitive interest rates in the banking industry. The 1-month term deposit rate and lending rate were also relatively stable in September 2024 at 4.75% and 9.2%, respectively. 

Credit growth remained high in September 2024, reaching 10.85% (yoy). On the supply side, solid credit growth was supported by bank lending appetite, the current bank strategy to reallocate liquid assets to credit, and policy support from Bank Indonesia in the form of KLM policy. As of the second week of October 2024, Bank Indonesia has disbursed KLM incentives totalling Rp256.5 trillion, including to state-owned banks (Rp119 trillion), national private commercial banks (Rp110.2 trillion), regional government banks (Rp24.6 trillion) and foreign bank branches (Rp2.7 trillion). The KLM incentives are disbursed to banks extending loans/financing to priority sectors, namely downstream Mineral and Coal Mining and Food sectors, MSMEs, the Automotive sector, Trade, Electricity, Gas and Water Supply, as well as Tourism and the Creative Economy. On the demand side, loan growth is supported by robust corporate performance. Credit growth remains high in most economic sectors, particularly the Corporate Services sector, Trade, Manufacturing Industry, Mining, and Transportation. By loan type, credit growth is primarily supported by working capital loans, consumer loans and investment loans, growing 10.01% (yoy), 10.88% (yoy) and 12.26% (yoy), respectively, in September 2024. Furthermore, sharia financing recorded 11.37% (yoy) growth, while MSME loan growth accelerated to 5.04% (yoy) in the reporting period. Consequently, Bank Indonesia still projects credit growth in the 10-12% range in 2024. 

Bank Indonesia continues strengthening KLM policy implementation to accelerate credit growth further. Moving forward, Bank Indonesia will strengthen KLM policy to revive lending/financing to businesses and create job opportunities as well as sectors that can ameliorate public welfare, including the lower-middle class, the MSME and ultra-micro segment and green sector, while maintaining prudential principles. Bank Indonesia will also strengthen the effective implementation of accommodative macroprudential policy in synergy with the Government, KSSK, banking industry and businesses to drive lending/financing for sustainable economic growth. 

Financial system resilience remains solid. Bank liquidity remained adequate in September 2024, as reflected by a high ratio of liquid assets to third-party funds (LA/TPF) at 25.40%. The Capital Adequacy Ratio (CAR) also remained high in August 2024 at 26.69%, thereby absorbing risk and supporting credit growth effectively. Meanwhile, non-performing loans (NPL), as a proxy of credit risk, were also low in August 2024, as indicated by NPL ratios of 2.26% (gross) and 0.78% (nett). Banking industry resilience in terms of capital and liquidity was also supported by maintained repayment capacity and corporate profitability, as confirmed by the latest BI stress tests. Moving forward, Bank Indonesia will continue strengthening synergy with KSSK to mitigate various risks that could potentially disrupt financial system stability.

Digital economic and financial transactions remained solid in the third quarter of 2024, supported by secure, seamless and reliable payment systems. On the wholesale or high-value side, BI-RTGS transactions increased 16.0% (yoy) to reach Rp45,252 trillion. On the other hand, the volume of retail transactions processed through BI-FAST increased 61.10% (yoy) to 924.89 million transactions. The volume of digital banking transactions was recorded at 5,666.28 million, growing 34.43% (yoy), while the volume of electronic money transactions grew 29.11% (yoy) to reach 4,001.11 million. The volume of card-based payments using ATM/debit cards retreated 8.59% (yoy) to 1,738.53 million transactions and credit card transactions increased 14.84% (yoy) to reach 116.97 million transactions. QRIS transactions enjoyed impressive 209.61% (yoy) growth, with QRIS users and merchants totalling 53.3 million and 34.23 million, respectively. In terms of rupiah currency management, total currency in circulation grew 9.96% (yoy) to Rp1,057.4 trillion. 

Payment system stability has been maintained, supported by a stronger structure and resilient infrastructure. In terms of infrastructure, Bank Indonesia maintains a seamless and reliable payment system (SPBI). 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 to ensure adequate availability of Rupiah currency fit for circulation in suitable denominations throughout all regions of the Republic of Indonesia, including frontier, outermost and remote regions.