Bank Indonesia lowered its benchmark interest rate by 25 basis points on Wednesday, resuming monetary easing as the country faces slower economic momentum and external trade pressure. 

The central bank reduced the 7-day reverse repurchase rate to 5.50%, in line with most market forecasts. It also cut the overnight deposit and lending facility rates to 4.75% and 6.25%, respectively. 

"This decision reflects our confidence in inflation remaining within target and the need to maintain rupiah stability while supporting domestic economic recovery," BI Governor Perry Warjiyo said at a press briefing following the policy meeting. 

Indonesia’s inflation rate stood at 2.84% year-on-year in April, staying within the central bank’s target range of 1.5% to 3.5%. Warjiyo noted that stable prices and a manageable fiscal outlook provided space for easing. 

The move comes after three consecutive meetings with no policy change. BI last cut rates in January. 

Economic growth in Southeast Asia’s largest economy slowed to 4.87% in the first quarter - the softest pace since 2021. BI adjusted its 2025 growth outlook slightly lower to a range of 4.6% to 5.4%, citing weaker export demand and pressure from U.S. tariffs. 

The rupiah has rebounded modestly in recent weeks after hitting a multi-year low in April. Warjiyo said the central bank would continue market interventions as needed to support the currency and ensure adequate liquidity.