BI Interest Rate to Drop to 5.25% in 2025: What is the BI Rate and Its Impact on the Indonesian Economy?

Bittime - Bank Indonesia (BI) again made an important decision at the board of governors meeting (RDG) in July 2025. BI officially loweredBI Rate by 25 basis points to 5.25%, with the Deposit Facility interest rate lowered to 4.50% and the Lending Facility interest rate to 6.00%. This decision aligns with low inflation, the stable Rupiah exchange rate, and efforts to stimulate economic growth.

However, for the general public, questions that often appear are: What is the BI interest rate? What is the latest Bank Indonesia interest rate, and what impact will it have on the Indonesian economy?This article will discuss it in full.

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What is the BI Interest Rate?

The BI interest rate or BI Rate is the benchmark interest rate set by Bank Indonesia to maintain economic stability, control inflation, and influence the direction of monetary policy.

• If the BI Rate rises → loan interest also rises, consumption and investment tend to fall.

• If the BI Rate falls → loan interest falls, credit increases, and public consumption increases.

Latest BI Interest Rates for 2025

In the July 2025 RDG decision:

• BI Rate: 5,25%

• Deposit Facility: 4,50%

• Lending Facility: 6,00%

This reduction was made because inflation is expected to remain under control in the range of 2.5±1% until 2026, while the Rupiah is stable in line with its fundamentals.

Impact of BI Interest Rates in 2025 on the Economy

1. Bank Credit Growth
   Lower interest rates give banks room to lower credit interest rates, making it easier for people and businesses to borrow funds.

2. Encouraging Investment
   Lower interest rates increase investment interest in the real sector, especially MSMEs and priority sectors.

3. Inflation and Rupiah Stability
   BI ensures that this policy will not disrupt price stability and will maintain the Rupiah exchange rate amid global uncertainty.

4. Public Purchasing Power
   With lower consumer credit interest rates, people have the opportunity to have greater purchasing power, thus supporting domestic consumption growth.

Future Policy Prospects

Bank Indonesia still has room for interest rate cuts if inflation and rupiah stability remain stable. Macroprudential policies and digital payment systems are also being strengthened to maintain sustainable national economic growth.

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Conclusion

DeclineBI 2025 interest rate will be 5.25%This is a strategic step to maintain inflation and stabilize the Rupiah, while simultaneously encouraging credit and investment. For the public, this means potentially lower loan interest rates and increased access to financing.

Going forward, BI will continue to monitor global and domestic conditions to ensure that monetary policy remains effective in supporting Indonesia's economic growth.

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FAQ

What is BI interest rate?

Bank Indonesia's benchmark interest rate to control inflation, Rupiah stability, and the direction of monetary policy.

What is the latest BI interest rate for 2025?

As of July 2025, the BI Rate will drop to 5.25%.

Why was the BI interest rate lowered?

Due to low inflation, the Rupiah is stable, and to encourage economic growth.

What is the impact of the decrease in BI Rate on the community?

Loan interest rates could be lowered, making consumer and investment credit more accessible.

Can BI interest rates fall again?

Yes, BI is open to further rate cuts if inflation and Rupiah stability are favorable.