Economists Divided on Bank Indonesia Rate Decision

Mixed Expectations Ahead of December 2025 Meeting

The upcoming Bank Indonesia (BI) monetary policy meeting in December 2025 is generating mixed expectations among economists, with Bloomberg's survey revealing a divided consensus on the central bank's next move. The survey indicates that 22 out of 34 economists (65%) expect BI to maintain the current BI Rate of 4.75%, while 12 economists (35%) predict a 25 basis point cut to 4.50%.

Economic Rationale Behind Rate Hold Prediction

Ekonom PT Bank Danamon Indonesia Tbk. (BDMN), Hosianna Evalita Situmorang, supports the rate hold prediction, citing BI's continued focus on stabilizing the Rupiah amid improving domestic economic prospects. Similarly, David Sumual, Chief Economist at PT Bank Central Asia Tbk. (BBCA), suggests that BI needs time to evaluate the transmission of previous policy decisions and their impact on the economy. The stagnant credit growth at 7.36% year-on-year as of October 2025 is a key concern. However, positive signals from the real sector, such as improving Purchasing Managers' Index (PMI) and retail sales, indicate potential economic recovery in Q4/2025.

Case for Potential Rate Cut

In contrast, Fikri C. Permana of KB Valbury Sekuritas argues that there is room for BI to relax monetary policy further through a rate cut. He highlights that the recent Fed rate cut has stabilized the Rupiah and created a favorable environment for BI to reduce rates. With a current interest rate differential of 75 basis points between BI and the Fed considered attractive for foreign capital inflows, Fikri believes that a rate cut could provide necessary stimulus for domestic economic growth. He emphasizes that controlled domestic inflation and reduced global risks create a conducive environment for such a move.

Market Implications

The decision will be closely watched for its implications on Indonesia's monetary policy direction and financial markets. A rate hold would signal BI's continued focus on currency stability and inflation control, while a rate cut could indicate a shift towards more accommodative monetary policy to support economic growth. The outcome will likely influence capital flows, bond yields, and overall market sentiment in the short term.