No. 27/111/DKom 

The Bank Indonesia Board of Governors decided on 20^th-21^st May 2025 to lower the BI-Rate by 25bps to 5.50%, while also lowering the Deposit Facility (DF) rate by 25bps to 4.75% and the Lending Facility (LF) rate by 25bps to 6.25%. The decision is consistent with low and controlled inflation projected in 2025 and 2026 within the 2.5±1% target corridor, along with efforts to maintain rupiah exchange rate stability in line with economic fundamentals and drive economic growth. Moving forward, Bank Indonesia will continue orienting monetary policy towards maintaining inflation within the target corridor and rupiah exchange rate stability in line with economic fundamentals, while considering further room to nurture economic growth based on global and domestic economic dynamics. Meanwhile, Bank Indonesia continues optimising accommodative macroprudential policy to foster sustainable economic growth, using various strategies to revive credit growth and enhance liquidity management flexibility in the banking industry. Payment system policy is also oriented towards supporting economic growth, particularly the trade sector as well as micro, small and medium enterprises (MSMEs), by expanding the acceptance of digital payments, while strengthening the infrastructure and consolidating the structure of the payment system industry.

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

1. Strengthening the rupiah stabilisation strategy in line with economic fundamentals, primarily through intervention in offshore non-deliverable forward (NDF) transactions as well as domestic foreign exchange market intervention with a focus on spot and domestic non-deliverable forward (DNDF) transactions, while also purchasing government securities (SBN) in the secondary market to maintain financial market stability and sufficient liquidity in the banking industry.

2. Strengthening the pro-market monetary operations strategy to enhance monetary policy transmission effectiveness, maintain adequate liquidity, accelerate money market and foreign exchange market deepening and attract foreign capital inflows by:

1. managing the interest rate structure of monetary instruments and forex swaps to strengthen the effective transmission of lower interest rates, while attracting portfolio inflows to domestic financial assets,
2. strengthening the strategies for term-repo and forex swap transactions to maintain sufficient liquidity in the money market and banking industry, and
3. 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.
3. Raising the Bank Foreign Funding Ratio (RPLN) from a maximum of 30% to 35% of bank capital. This strengthening measure aims to increase bank foreign funding sources in line with economic needs, while maintaining prudential principles, by applying a countercyclical parameter of 5% on top of the RPLN. This is effective from 1^st June 2025 and will be regulated further in the provisions concerning RPLN.

4. Loosening liquidity by lowering the Macroprudential Liquidity Buffer (PLM) by 100bps from 5% to 4% for conventional commercial banks, with repo flexibility of 4%, and the sharia PLM by 100bps from 3.5% to 2.5% for sharia commercial banks, with repo flexibility of 2.5%. The reduction also aims to provide greater liquidity management flexibility in the banking industry, effective from 1^st June 2025.
5. Strengthening prime lending rate (PLR) transparency policy with a focus on interest rates by Macroprudential Liquidity Incentive Policy (KLM) policy priority sector (Appendix).
6. Expanding digital acceptance by accelerating preparations for the implementation of QRIS Cross-Border between Indonesia and Japan and initiating QRIS Cross-Border trials between Indonesia and China.

7. 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 coordination 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.

Global economic uncertainty eased slightly with the temporary deal struck between the United States (US) and China to significantly lower import tariffs for 90 days. The agreement improved the world economic outlook to 3.0% from the 2.9% forecast in April 2025. Economic growth projections for the US and China were upgraded from April 2025, which also impacted various other countries positively, including Europe, Japan and India. The lower tariffs are also predicted to reduce US inflation, thereby maintaining strong expectations of a reduction to the Federal Funds Rate (FFR). Meanwhile, US Treasury yields are higher than expected in line with the growing risk to US fiscal sustainability. In the global financial markets, the rebalancing of capital flows from the US to safe haven assets and countries continues, with early signs of increasing capital flows to emerging markets (EM). Consequently, the DXY Index continued to weaken, accompanied by US dollar depreciation against emerging Asian currencies (ADXY Index).  Moving forward, however, highly dynamic import tariff negotiations between the US and China as well as various other countries will maintain elevated global economic uncertainty. Such inauspicious conditions demand vigilance and a strong coordinated policy response to maintain external resilience, control stability and drive domestic economic growth.


At home, economic growth in Indonesia must be strengthened constantly to overcome the deleterious impact of global uncertainty caused by the reciprocal tariffs introduced by the US. Domestic economic growth in the first quarter of 2025 was recorded at 4.87% (yoy), down from 5.02% (yoy) in the fourth quarter of 2024. First-quarter GDP growth in 2025 was supported by household consumption in line with increasing community activity and mobility during the New Year festive period and Eid-ul-Fitr national religious holiday. Investment maintained growth given the realisation of capital investment, while export growth was supported by demand from Indonesia's main trading partners and services exports. By sector, the manufacturing industry, trade sector, transportation and storage as well as agriculture performed well. The latest developments in the second quarter of 2025 indicate the ongoing need to strengthen efforts to foster economic activity. Economic growth in Indonesia is forecast to improve in the latter half of the year on the back of increasing domestic demand, which includes a bump in government spending. Based on GDP realisation in the first quarter of 2025 and monitoring global economic dynamics, Bank Indonesia projects national economic growth in 2025 within the 4.6-5.4% range, retreating slightly from the previous projection of 4.7-5.5%. The policy response must be strengthened to drive economic growth, which includes strengthening domestic demand and optimising all opportunities to boost exports. To that end, Bank Indonesia continues strengthening its monetary and macroprudential policy mix, underpinned by accelerating payment system digitalisation, in synergy with the fiscal stimuli of the Government, while supporting implementation of the Government's Asta Cita program.


Indonesia's Balance of Payments (BOP) remains sound, with portfolio inflows returning in May 2025, thereby supporting external resilience. In the first quarter of 2025, a narrow current account deficit is expected to be maintained, supported by a goods trade surplus, primarily non-oil and gas. The capital and financial account also remains under control, bolstered by a direct investment surplus and increasing portfolio investment in line with maintained positive investor perception of the promising domestic economic outlook. In the second quarter of 2025, portfolio investment inflows in May 2025 increased again, particularly in terms of SBN and equity, in response to less global uncertainty and the persistently solid domestic economic outlook for Indonesia. This positive developments reinforces external resilience following the net outflows of portfolio investment recorded in April 2025, amid cumulative net outflows for the second quarter of 2025, which, as of May 19, 2025, remained at USD 3.1 billion. The position of foreign reserves at the end of April 2025 was recorded at USD152.5 billion, equivalent to 6.4 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. In 2025, Bank Indonesia expects solid BOP performance to be maintained, supported by a manageable current account deficit in the 0.5-1.3% of GDP range, accompanied by a capital and financial account surplus despite persistently high global uncertainty.


Rupiah exchange rates remain stable and appreciating, underpinned by Bank Indonesia's stabilisation policy and slightly lower global financial market uncertainty. Against the US dollar, the value of the rupiah in May 2025 (as of 20^th May 2025) appreciated by 1.13% (ptp) compared with the level recorded at the end of April 2025. The rupiah also tended to appreciate against a basket of developing economies (DE) currencies, as major trading partners of Indonesia, and advance economies (AE) currencies, excluding the US dollar. Overall, rupiah movements remain consistent with domestic economic fundamentals to maintain economic stability. Moving forward, Bank Indonesia expects the rupiah will remain stable, underpinned by Bank Indonesia's commitment to maintain rupiah stability, together with 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 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.


Consumer Price Index (CPI) inflation was controlled in April 2025, thus strengthening economic stability. CPI inflation in April 2025 was recorded at 1.95% (yoy), accompanied by manageable core inflation recorded at 2.50% (yoy), in line with BI-Rate policy consistency to anchor inflation expectations. Volatile food (VF) inflation stood at 0.64% (yoy), supported by the adequate supply of major food commodities and 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. Meanwhile, administered prices recorded 1.25% (yoy) inflation in the reporting period, following 3.16% (yoy) deflation the month earlier, which was primarily affected by the discontinuation of government policy to discount electricity rates for households with an installed electrical capacity of <2,200VA. Looking ahead, Bank Indonesia is confident 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 volatile food (VF) inflation to remain manageable, supported by inflation control synergy between Bank Indonesia and the (central and regional) Government.


Bank Indonesia continues strengthening its monetary policy response to achieve the inflation target of 2.5%±1% in 2025 and 2026, maintain rupiah stability in line with the currency's fundamental value, and drive sustainable economic growth. To that end, Bank Indonesia continues optimising its pro-market monetary operations strategy to strengthen monetary policy transmission through the interest rate channel, particularly in the banking industry. In the money market, consistent 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 5.77% on 20^th May 2025 from 6.03% at the beginning of January 2025. Meanwhile, SRBI rates for tenors of 6, 9 and 12 months, as of 16^th May 2025, also tracked downward trends, namely to 6.40%, 6.44% and 6.47% 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 decreased from 6.96% to 6.16%, while yields on 10-year tenors decreased to 6.84% from 6.98%. Notwithstanding, interest rates in the banking industry remained comparatively high. In April 2025, the 1-month term deposit rate was recorded at 4.83%, increasing from 4.81% at the beginning of January 2025, with a number of banks tending to offer higher deposit rates than the published rate. The aggregate lending rate in the banking industry was also comparatively high, remaining relatively stable at 9.19% in April 2025 compared with 9.20% at the beginning of January 2025. Moving forward, Bank Indonesia acknowledges a further opportunity for the banking industry to lower interest rates and increase new loan disbursements to support stronger economic growth.


Bank Indonesia continues optimising its pro-market monetary operations strategy to support effective monetary policy transmission through adequate liquidity. In that context, Bank Indonesia continues optimising it is pro-market SRBI, SVBI and SUVBI monetary instruments. As of 19^th May 2025, the position of SRBI was recorded at Rp869.67 trillion, retreating from Rp923.53 trillion at the beginning of January 2025, thereby supporting monetary policy to expand liquidity. Meanwhile, the respective positions of SVBI and SUVBI instruments on 19^th May 2025 were recorded at USD1.97 billion and USD306 million. 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.  In addition, Bank Indonesia is also buying SBN in the secondary market to strengthen monetary policy to expand liquidity, while also reflecting close synergy with the fiscal policy of the Government. In 2025 (as of 20^th May 2025), Bank Indonesia has purchased SBN to the tune of Rp96.41 trillion, namely through the secondary market totalling Rp64.99 trillion and the primary market totalling Rp31.42 trillion in treasury bills (SPN), including sharia SPN. Moving forward, Bank Indonesia will continue optimising its pro-market monetary operations strategy to boost the effectiveness of monetary policy transmission towards achieving the inflation target and maintaining rupiah exchange rate stability.


The role of loans disbursed by the banking industry to support economic growth must be increased further. Credit growth in April 2025 was recorded at 8.88% (yoy), down from 9.16% (yoy) in March 2025. On the supply side, lending standards remain favourable, particularly for the agricultural sector, electricity, gas and water supply sector as well as social services. In general, liquidity conditions in the banking industry remain adequate despite moderating growth of third-party funds (TPF) from 5.51% (yoy) at the beginning of January 2025 to 4.55% (yoy) in April 2025. Such conditions have increased competition between banks for funding, thus requiring an expansion of other funding sources beyond TPF. On the demand side, the main contributors to credit growth are the manufacturing industry, transportation sector and social services, contrasting the limited contributions of the construction sector, trade and other sectors. By loan type, growth of working capital loans, investment loans and consumer loans stood at 4.62% (yoy), 15.86% (yoy) and 8.97% (yoy), respectively. Sharia financing recorded 8.85% (yoy) growth, while MSME loan growth stood at 2.60% (yoy) in the reporting period. Based on credit performance as of April 2025, Bank Indonesia projects growth of loans disbursed by the banking industry in 2025 in the 8-11% range. Moving forward, various efforts are required to increase new loan disbursements, which include lower interest rates and expanding funding sources in the banking industry, while also increasing demand from the real sector, thereby accelerating economic growth. To that end, Bank Indonesia will continue strengthening accommodative macroprudential policies to boost credit growth, which includes optimising the RPLN, PLM, and KLM.


Banking industry resilience remains solid, thereby strengthening financial system stability. Bank liquidity remains ample, accompanied by high capital and low credit risk. Ample liquidity was reflected by a stable ratio of liquid assets to third-party funds (LA/TPF) at 25.23% in April 2025. The Capital Adequacy Ratio (CAR) in March 2025 stood at 25.38%, adequate to absorb risk. This was supported by low non-performing loans (NPL), as a proxy of credit risk, as indicated by NPL ratios of 2.17% (gross) and 0.80% (nett) in March 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 continued growing in April 2025, supported by secure, seamless and reliable payment systems. Digital payments^[1] in April 2025 grew 31.50% (yoy) to reach 3.79 billion transactions, supported by all components. Transaction volume through mobile and internet banking applications grew 33.14% (yoy) and 8.65% (yoy), respectively. Similarly, digital payment transaction volume through QRIS continued to enjoy impressive 154.86% (yoy) growth, supported by increasing numbers of users and merchants. From an infrastructure perspective, the volume of retail transactions processed through BI-FAST grew 42.91% (yoy) to reach 335.34 million transactions, with a value of Rp849.51 trillion. On the wholesale or high-value side, the BI-RTGS system processed 724.03 thousand transactions, down 2.91% (yoy), with a transaction value of Rp15,293.92 trillion. In terms of rupiah currency management, total currency in circulation grew 7.28% (yoy) to Rp1,135.22 trillion in April 2025. Moving forward, Bank Indonesia will continue expanding cross-border payment system linkages, including QRIS cooperation with various countries and BI-FAST interconnectedness under the auspices of the Nexus initiative with several jurisdictions.


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 April 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 retail and wholesale payment systems operated by Bank Indonesia and the industry. 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.

Jakarta, 21^st May 2025

Communication Department

Ramdan Denny Prakoso

Executive Director


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