This marks the fifth rate cut since September 2022, bringing rates down by a total of 125 basis points to their lowest level since late 2022.
Indonesia’s central bank, Bank Indonesia (BI), announced it has cut its benchmark interest rate by 25 basis points to 5.00% on 20 August 2025.
This is the fifth rate cut since September 2022 and the lowest level since late 2022, with the reduced rates totalling 125 basis points.
The central bank stated that this initiative is aimed at supporting the country’s economy amid global uncertainties, expectations of low inflation, a stable rupiah, and the need to boost economic activity.
Analysts predict further cuts of 50 basis points this year and another 50 basis points next year to support growth, as the government targets 5.4% economic growth for 2026.
Earlier, President Prabowo Subianto proposed a $234 billion budget for 2026 on 15 August 2025, a 7.3% increase from this year, emphasising defence and food and nutrition programs.
One key highlight of the 2026 budget is that the government will not introduce any new taxes; instead, internal tax reforms will be implemented to boost revenue.
