Indonesia’s central bank is expected to resume monetary easing after holding its rate unchanged for three consecutive meetings

Indonesia’s central bank is expected to resume monetary easing after holding its rate unchanged for three consecutive meetings

Indonesia's central bank, Bank Indonesia (BI), is poised to resume its monetary easing policies after holding its key interest rate unchanged for three consecutive meetings. The decision comes amid growing economic concerns and an increasing need for stimulus to bolster growth.

BI has maintained its policy rate at 3.5% since October 2024, with the last rate cut occurring in June 2024. The current economic environment, characterized by slowing growth and elevated inflation, has led market participants to anticipate a rate reduction in the upcoming meeting.

Analysts and economists have cited several factors contributing to the expected easing. These include the recent slowdown in economic activity, which has been exacerbated by global headwinds and domestic challenges such as high inflation and a depreciating currency. Furthermore, the ongoing geopolitical tensions and the impact of the COVID-19 pandemic have added to the economic uncertainty.

BI's decision to resume monetary easing is likely to be influenced by its mandate to maintain price stability and support economic growth. The central bank has been monitoring inflation closely, with consumer prices rising at an annual rate of 6.4% in April 2025, which is slightly above the target range of 2% to 4%.

The upcoming monetary policy meeting is expected to focus on these economic indicators and the potential impact of further rate cuts on inflation and growth. The BI's move could signal a shift in its stance towards a more accommodative monetary policy, aiming to provide additional support to the economy.

The market's anticipation for a rate cut has been reflected in recent surveys and analyst forecasts. A poll conducted by Topline Securities indicated that 75% of participants expected BI to announce a rate cut of 50 basis points [NUMBER: 1].

In conclusion, Indonesia's central bank is expected to resume monetary easing in its upcoming meeting, with the key policy rate likely to be reduced. This move is anticipated to provide additional support to the economy, which has been facing headwinds from various factors, including slowing growth and elevated inflation.

References:
[1] https://www.arabnews.com/node/2587243/pakistan