Bank Indonesia (BI) has kept its benchmark 7-day reverse repurchase rate unchanged at 5.75% for the second consecutive meeting. The central bank also maintained the Deposit Facility rate at 5.00% and the Lending Facility rate at 6.50%. The decision comes amid heightened volatility in local financial markets, fueled by concerns over global trade tensions and the government’s fiscal policies. 

The rupiah, which has been under pressure, remained near its weakest level in five years, trading at IDR 16.520 after BI’s announcement. Jakarta’s main stock index also experienced a sharp decline of 7.1% on Tuesday, March 18, reflecting investor concerns about economic growth and fiscal strategies. 

BI Governor Perry Warjiyo stated that the rupiah should strengthen according to Indonesia’s fundamentals but that the currency experienced some technical pressure.  

“Bank Indonesia sees that the movement of the rupiah exchange rate is not in accordance with its fundamental value and has the potential to strengthen in the future,” said Warjiyo, as quoted by Reuters. 

Mr. Warjiyo emphasized that the central bank will closely monitor inflation and economic growth to identify opportunities for adjusting the BI rate, while also considering rupiah movements. This comes in regard to February's notable annual decline in the Consumer Price Index (CPI)—the first since March 2000—driven primarily by the government's substantial electricity tariff reductions. These reductions led to inflation falling below BI's target range of 1.5% to 3.5%. 

Additionally, BI has retained its economic growth outlook for 2025 at 4.7% to 5.5%, supported by a rise in non-construction investments, keeping in mind President Prabowo Subianto’s ambitious goal of increasing growth to 8% by 2029.