Bank Indonesia Maintains Interest Rate at 6.25%

Bank Indonesia (BI) has maintained its benchmark interest rate at 6.25% for the fourth consecutive month, focusing on stabilizing the rupiah and ensuring inflation remains within the target range of 1.5% to 3.5%. Governor Perry Warjiyo indicated that while no immediate rate cuts are anticipated, the central bank may consider easing in the fourth quarter, contingent on global economic conditions and the Federal Reserve's decisions. The rupiah has shown significant strength, appreciating by approximately 5% this month, which is attributed to favorable portfolio inflows, particularly into government bonds. Inflation eased to 2.13% in July, the lowest since February 2022, supporting BI's current stance. Economists generally expect BI to wait for the Fed to cut rates before implementing any easing of its own, highlighting a cautious approach amid global uncertainties. The central bank's decisions reflect a broader trend among regional counterparts, with some already beginning to ease monetary policy.