The Bank Indonesia Board of Governors Meeting (RDG) on March 18-19, 2025, decided to maintain the BI-Rate at 5.75%, the Deposit Facility interest rate at 5.00%, and the Lending Facility interest rate at 6.50%.

This decision is consistent with efforts to maintain the 2025 and 2026 inflation forecast within the 2.5±1% target, maintain the stability of the Rupiah exchange rate in line with fundamentals amidst persistently high global uncertainty, and contribute to economic growth. Going forward, Bank Indonesia will continue to monitor the inflation and economic growth outlook to utilize the room for BI-Rate reductions, taking into account Rupiah exchange rate movements. Meanwhile, macroprudential and payment system policies continue to be optimized to support sustainable economic growth. The Macroprudential Liquidity Incentive (KLM) policy is aimed at further encouraging bank credit/financing to priority growth sectors and job creation, in line with the Government's Asta Cita program. Payment system policies are also aimed at supporting economic growth, particularly in the trade and MSME sectors. The reliability of the payment system infrastructure and industry structure will continue to be strengthened, and acceptance of payment system digitalization will continue to be expanded.

The direction of the monetary, macroprudential and payment system policy mix to maintain stability in order to strengthen sustainable economic growth is supported by the following policy steps:

1. Strengthening the pro-market monetary operations strategy to strengthen the effectiveness of monetary policy transmission, accelerate the deepening of the money market and foreign exchange (forex) market, and encourage foreign capital inflows, by:
1. optimizing Bank Indonesia Rupiah Securities (SRBI), Bank Indonesia Foreign Currency Securities (SVBI), and Bank Indonesia Foreign Currency Sukuk (SUVBI) as pro-market monetary instruments;
2. maintaining the interest rate structure of monetary instruments to continue to attract foreign portfolio inflows into domestic financial assets;
3. strengthening term-repo and swap transaction strategies foreign exchange ; and
4. strengthening the role of Primary Dealers (PD) to increase SRBI transactions in the secondary market and repurchase agreement (repo) transactions between market players;
   
2. Strengthening the Rupiah exchange rate stabilization strategy in accordance with fundamentals through intervention in the foreign exchange market in spot transactions, Domestic Non-Deliverable Forward (DNDF), and Government Securities (SBN) in the secondary market;
3. Strengthening the publication of transparency assessments of Basic Credit Interest Rates (SBDK) with in-depth analysis of credit interest rates based on priority sectors covered by KLM (Attachment);
4. Strengthening digital acceptance by: (i) implementing strategies to achieve QRIS targets, both from the supply and demand sides, through synergy with government programs to achieve inclusive growth and increase the efficiency of retail transactions between countries; and (ii) maintaining the momentum of utilizing cross-border QRIS cooperation in established corridors; and

5. Strengthening support for payment system policies in government programs, including through the QRIS cross-border expansion program at various tourism destinations and for international tourists, as well as financial literacy for Indonesian Migrant Workers (PMI).
   

Bank Indonesia also continues to strengthen policy synergy with the Government to maintain stability and encourage economic growth in line with the Government's Asta Cita program. Synergy is carried out in 7 (seven) policy areas, namely (i) Rupiah exchange rate stabilization policy in mitigating global turmoil, (ii) coordination of monetary and fiscal policies, (iii) efforts to encourage economic financing through KLM, (iv) support in accelerating the Government's digital transformation, (v) efforts to strengthen downstreaming and food security, (vi) support in encouraging the development of a green, sharia, and inclusive economy, and (vii) support in human resource development. In addition, Bank Indonesia continues to strengthen policy synergy with the Financial System Stability Committee (KSSK) to maintain financial system stability. Bank Indonesia also strengthens and expands international cooperation in the area of central banking, including payment system connectivity and transactions using local currencies, as well as facilitating the implementation of investment and trade promotions in priority sectors in collaboration with relevant agencies.

Global uncertainty remains high due to the United States' increasingly broad import tariff policies.

In the US, import tariffs have resulted in slower economic growth amidst increased fiscal incentives, while inflation has declined less rapidly than anticipated. The economies of Europe, Japan, and India have also been impacted by the spillover effects of US import tariffs, amidst stagnant domestic demand due to low business confidence and slowing exports. Meanwhile, weakening economic growth in China, driven by the US import tariffs, has been curbed by a wider fiscal deficit in 2025 than targeted. With these developments, global economic growth in 2025 is projected at 3.2%. In global financial markets, uncertainty persists, fueled by declining US Treasury yields and a weakening US dollar index (DXY) amid uncertainty about a Fed Funds Rate (FFR) cut. Global capital flows, previously concentrated in the US, have shifted partly to gold and bonds in developed and developing countries. Meanwhile, equity investment portfolios remain concentrated in developed countries, excluding the US, and have not yet entered emerging market (EM) countries. The persistence of high global uncertainty requires an appropriate and well-coordinated policy response to strengthen external resilience, maintain stability, and stimulate domestic economic growth.

Indonesia's economic growth is well maintained amidst still high levels of uncertainty.

Household consumption remains strong, although further encouragement is needed to capitalize on maintained consumer confidence, government spending support related to the provision of holiday allowances (THR) and social spending, and the seasonal increase in demand ahead of the Eid al-Fitr 1446 H celebrations. Private investment also needs to be further increased to optimize producer confidence, as reflected in Bank Indonesia's expansive Prompt Manufacturing Index (PMI), particularly in the increase in order volume. Externally, non-oil and gas exports increased in February 2025, supported primarily by palm oil and motor vehicles. Sectorally, agricultural businesses are predicted to increase driven by the bumper harvest, while the mining and manufacturing sectors are slowing due to declining external demand. Given these developments, Bank Indonesia projects economic growth in 2025 to remain robust in the range of 4.7-5.5%. Going forward, Bank Indonesia will continue to optimize its policy mix to maintain stability and encourage sustainable economic growth. Macroprudential policy stimulus and the acceleration of digital payment transactions will continue to be optimized to synergize with the government's fiscal stimulus in driving economic growth. Bank Indonesia also continues to fully support the implementation of the Government's Asta Cita program, including for economic financing, digitalization, downstreaming, and food security. 

Indonesia's Balance of Payments (BOP) remains sound and supports external resilience.

The trade balance surplus continued in February 2025 at US$3.1 billion, after recording a surplus of US$3.5 billion in January 2025. Meanwhile, foreign capital inflows into domestic financial instruments improved in March 2025. Foreign capital inflows into SBN and SRBI in March 2025 (as of March 17, 2025) recorded a net Inflows of US$0.2 billion and US$0.1 billion, respectively, were in line with attractive yields and a consistently positive economic outlook. Meanwhile, capital flows into stocks during March 2025 recorded a net outflow of US$0.3 billion in line with developments in regional stock markets. With this development, portfolio investment in 2025, from the beginning of the year to March 17, 2025, recorded a net inflow of US$0.8 billion, driven by inflows into SBN and SRBI. Indonesia's foreign exchange reserves at the end of February 2025 remained high at US$154.5 billion, equivalent to financing 6.6 months of imports or 6.4 months of imports and servicing the government's external debt, and well above the international adequacy standard of around three months of imports. Overall, the balance of payments (BOP) deficit in 2025 is projected to remain healthy, supported by a continued capital and financial account surplus supported by consistently attractive investment returns and a current account deficit maintained within the range of 0.5% to 1.3% of GDP. 

The Rupiah exchange rate remains under control, supported by Bank Indonesia's stabilization policy.

The Rupiah exchange rate against the US dollar in March 2025 (as of March 18, 2025) strengthened by 0.94% (ptp) after weakening 1.69% (ptp) in February 2025, influenced by reduced foreign capital inflows into regional stocks, including Indonesia, in line with global uncertainty. The continued stability of the Rupiah exchange rate is in line with the consistency of Bank Indonesia's stabilization policy. The controlled Rupiah is also reflected in the Rupiah's relative stability when compared to the currencies of Indonesia's main developing trading partners, and remains stronger against the currencies of developed countries outside the US dollar. Going forward, the Rupiah exchange rate is predicted to be stable, supported by Bank Indonesia's commitment to maintaining Rupiah exchange rate stability, attractive yields, low inflation, and Indonesia's continued positive economic growth prospects. All monetary instruments will continue to be optimized, including strengthening the pro-market monetary operations strategy. through optimization of SRBI, SVBI, and SUVBI instruments, to strengthen the effectiveness of policies in attracting foreign portfolio investment inflows and supporting the stability of the Rupiah exchange rate. 

Consumer Price Index (CPI) inflation in February 2025 remained low and supported economic stability.

The CPI in February 2025 experienced deflation of 0.09% (yoy), primarily driven by the positive impact of the electricity tariff discount policy for households with installed electricity capacity < 2,200 VA, which pushed the administered prices (AP) component to experience deflation of 9.02% (yoy). Meanwhile, core inflation remained under control at 2.48% (yoy) in line with the consistency of Bank Indonesia's policy interest rate (BI-Rate) to guide inflation expectations. Volatile food (VF) inflation slowed by 0.56% (yoy), supported by close synergy between Bank Indonesia and the TPIP and TPID through the GNPIP in various regions. Going forward, Bank Indonesia believes CPI inflation will remain under control within the 2.5±1% target. Core inflation is expected to be maintained in line with inflation expectations anchored within the target, the economy's still large capacity and ability to respond to domestic demand, controlled imported inflation in line with Bank Indonesia's Rupiah exchange rate stabilization policy, and the positive impact of growing digitalization. VF inflation is predicted to be under control, supported by the synergy of inflation control between Bank Indonesia and the Central and Regional Governments.

Pro-market monetary operations strategies and instruments continue to be strengthened to support the stabilization of the Rupiah exchange rate and the achievement of the inflation target.

In an effort to deepen the money and foreign exchange markets, and encourage foreign capital inflows into the domestic financial market, the pro-market monetary instruments SRBI, SVBI, and SUVBI continue to be optimized. As of March 17, 2025, the positions of SRBI, SVBI, and SUVBI instruments were recorded at Rp892.36 trillion, US$2.30 billion, and US$320 million, respectively. Non-resident ownership of SRBI as of March 17, 2025, reached Rp232.41 trillion (26.05% of the total outstanding ). The implementation of primary dealers since May 2024 has also further increased SRBI transactions in the secondary market and repurchase agreements (repos) between market participants, thereby strengthening the effectiveness of monetary instruments in stabilizing the Rupiah exchange rate and controlling inflation. Bank Indonesia also purchases SBN from the secondary market to strengthen monetary operations, reflecting the close synergy between the Government's monetary and fiscal policies. Throughout 2025 (as of March 18, 2025), Bank Indonesia purchased Rp70.74 trillion in government securities (SBN), including Rp47.31 trillion through the secondary market and Rp23.43 trillion in the primary market in the form of Government Treasury Bills (SPN), including Sharia-compliant ones. Going forward, various innovative instruments that have been issued will be optimized to further strengthen Indonesia's external economic resilience and enhance the effectiveness of monetary policy transmission.

Monetary policy transmission is running well, especially to the money market .

In line with the BI-Rate reduction in January 2025 and monetary operations undertaken by Bank Indonesia, the decline in the money market interest rate (INDONIA) continued to 5.79% on March 18, 2025 from 6.03% in early January 2025. SRBI interest rates for 6, 9, and 12-month tenors on March 14, 2025 also decreased, but remained attractive to support foreign capital inflows, namely from 7.16%; 7.20%; and 7.27% in early January 2025 to 6.32%; 6.37%; and 6.40%, respectively. The yield on 2-year SBN as of March 18, 2025 also remained attractive despite decreasing, from 6.96% to 6.51%, while the yield on 10-year SBN increased from 6.98% to 7.00%. Meanwhile, bank interest rates remained low, supported by adequate bank liquidity in line with the implementation of the KLM strengthening and the publication of Prime Lending Rate (SBDK) transparency. This, in turn, improved the efficiency of bank interest rate formation, thus supporting bank lending. The 1-month deposit rate and lending rate in February 2025 were recorded at 4.79% and 9.21%, respectively, relatively stable compared to the previous month.

Bank credit remains high to support efforts to encourage economic growth.

Credit growth reached 10.30% (yoy) in February 2025, driven by both supply and demand. On the supply side, credit growth was supported by the continued reallocation of liquid assets to credit by banks, funding support from TPF growth that has continued to show a positive trend since 2025, and continued strong liquidity availability in line with the implementation of the KLM (Low-Cost Loan) strengthening. As of the second week of March 2025, Bank Indonesia had provided KLM incentives totaling IDR 291.8 trillion, each to state-owned banks (IDR 125.7 trillion), state-owned banks (IDR 132.8 trillion), regional development banks (BPD) (IDR 27.9 trillion), and foreign exchange banks (KCBA) (IDR 5.4 trillion). Sectorally, these incentives were distributed to priority sectors: agriculture, real estate , public housing, construction, trade and manufacturing, transportation, warehousing, tourism and the creative economy, as well as MSMEs, Ultra Micro, and green businesses. On the demand side, credit growth was supported by continued positive corporate sales growth. Based on usage groups, growth in investment credit, working capital credit, and consumer credit was 14.62% (yoy), 7.66% (yoy), and 10.31% (yoy), respectively. Sharia financing grew by 9.15% (yoy), while MSME credit grew by 2.51% (yoy). Going forward, Bank Indonesia will also encourage credit growth through various accommodative macroprudential policies to support economic growth, including optimizing the increase in KLM from a maximum of 4% to up to 5% of DPK, effective April 1, 2025. The 1% increase in KLM will further encourage bank credit/financing to priority sectors for growth and job creation in line with the Government's Asta Cita program. 

Banking resilience remains strong, supporting financial system stability. Bank liquidity is adequate, as reflected in the high Liquid Assets to Deposits (AL/TPF) ratio of 26.32% in February 2025. In terms of capital, the banking Capital Adequacy Ratio (CAR) in January 2025 was recorded at a high 27.01%. Credit quality also remains healthy, as reflected in the low Non-Performing Loan (NPL) ratios in January 2025, at 2.18% (gross) and 0.79% (net). Overall, banking resilience remains strong in facing various risks, as reflected in the consistently good results of stress tests conducted by Bank Indonesia, and supported by maintained corporate repayment capacity and profitability. Bank Indonesia will continue to strengthen policy synergy with the Financial System Stability Committee (KSSK) to mitigate various risks that could disrupt banking resilience and overall financial system stability.

Digital economic and financial transactions continued to grow in February 2025, supported by a secure, smooth, and reliable payment system.

From the transaction side, digital payments ^[1] reached 3.38 billion transactions, or grew 31.21% (yoy) in February 2025, supported by all its components. Transaction volume on the mobile application and the transaction volume on the internet continues to increase, growing by 32.22% (yoy) and 16.51% (yoy) respectively in February 2025. Similarly, the volume of digital payment transactions through QRIS continues to grow high by 163.32% (yoy) in February 2025 supported by an increase in the number of users and merchants . In terms of infrastructure, the volume of retail transactions processed through BI-FAST reached 330.08 million transactions or grew 75.82% (yoy) with a value of Rp858.27 trillion in February 2025. The volume of large value transactions processed through BI-RTGS increased by 4.66% (yoy) to 807.18 thousand transactions with a value of Rp14,749.90 trillion in February 2025. Meanwhile, in terms of Rupiah money management, Circulating Currency (UYD) grew 9.79% (yoy) to Rp1,112.22 trillion in February 2025.

The stability of the payment system remains maintained, supported by a stable infrastructure and a healthy industrial structure. 

In terms of infrastructure, the stability of the payment system is reflected in the smooth and reliable implementation of the Bank Indonesia Payment System (SPBI) and the sufficient supply of money in sufficient quantity and quality in February 2025. In terms of industry structure, interconnections between payment system players continue to strengthen, followed by an expanding Digital Financial Economy (EKD) ecosystem. Payment transactions based on the National Standard Open API Payment (SNAP) also increased in line with the expanding adoption rate. Going forward, Bank Indonesia will continue to ensure the availability, reliability, and security of SPBI and the industry payment system, including monitoring the reliability of participant systems in providing payment system transaction services during the Ramadan and Eid al-Fitr 1446 H holiday period. Bank Indonesia continues to maintain the availability of Rupiah currency in sufficient quantities with quality fit for circulation throughout the territory of the Unitary State of the Republic of Indonesia (NKRI), including the Frontier, Outermost, Remote (3T) regions and during the Ramadan and Eid al-Fitr (RAFI) period through the Semarak Rupiah Ramadan and Eid al-Fitr Blessings (SERAMBI) 2025 program.

Source: Bank Indonesia & Kontan

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