TEMPO.CO, Jakarta - An economist from Paramadina University, Wijayanto Samirin, suggested that Bank Indonesia (BI) should lower its benchmark interest rate, especially following U.S. President Donald Trump's announcement of a 32 percent import tariff on Indonesian goods. BI is scheduled to hold its Monthly Board of Governors' Meeting on July 15-16, 2025.
"In the current situation, ideally, BI should take more risks to boost economic growth," Wijayanto told Tempo on Saturday, July 12, 2025.
Wijayanto noted that both the public and businesses are eager for a rate cut to stimulate the economy. However, he acknowledged the current risk of rupiah volatility.
The central bank has already reduced its benchmark rate twice this year, first to 5.75 percent in January and then to 5.5 percent in May.
Manulife Investment Management also viewed the potential for rate cuts in ASEAN economies, including Indonesia, to counter tariff impacts and spur growth. "This reduction will drive the performance of domestic bonds in these countries," said Murray Collis, Head of Asia ex-Japan Fixed Income at Manulife Investment Management, on Friday, July 11, 2025.
BI Governor Perry Warjiyo echoed this sentiment during a July 3, 2025, meeting with the House of Representatives' Commission XI, confirming room for further rate reductions. "We have lowered the BI Rate in January and May to 5.5 percent, and we still have room to lower it in the future," Perry said, citing low inflation and the need for economic stimulus.
Indonesia's 2025 economic growth is now projected at 4.7-5 percent, a downgrade from the government's initial 5.2 percent target, as announced by Finance Minister Sri Mulyani on July 1, 2025. Inflation is estimated to stay between 2.2-2.6 percent in the second half of 2025, with the rupiah's exchange rate forecast at Rp16,300-Rp16,800 per US dollar.
The state treasurer highlighted that Trump's tariffs and ongoing Middle East conflicts will impact the second quarter's economic conditions. "We need to remain vigilant against global risks so that the 5 percent outlook can still be maximized to be achieved," she cautioned.
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