Amid mounting inflationary pressures and persistent global uncertainties, Bank Indonesia (BI) finds itself in a precarious position, necessitating a cautious approach to its monetary policy decisions. In this challenging environment, economists largely agree that BI’s top priority will be safeguarding the stability of the rupiah.
Josua Pardede, Chief Economist at Bank Permata, projects that Bank Indonesia (BI) will maintain its benchmark interest rate at 4.75% in November 2025. This anticipation comes as BI prepares to announce the outcomes of its Board of Governors Meeting (RDG) for the month on Tuesday, November 19.
Pardede attributes the likely decision to hold the BI-Rate steady to the prevailing high global uncertainty. “This continues to strengthen a high-risk environment,” Josua told Katadata.co.id on Tuesday, November 18, underscoring the challenges faced by policymakers.
Furthermore, Pardede highlighted that markets remain wary of potential interest rate cuts by the United States Federal Reserve (The Fed). He believes The Fed still has a window to implement a rate reduction in December 2025, a move that would undoubtedly ripple through global financial markets.
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Why BI Needs to Hold Interest Rates
Teuku Riefky, a Macroeconomics and Financial Market Economist at LPEM UI, concurs with the need for BI to maintain its current benchmark interest rate. He emphasizes that a more prudent policy setting is essential amidst rising inflation, which demands careful navigation.
“Inflation is starting to pick up and has the potential to rise further, aligning with seasonal demand peaks,” Riefky noted, pointing to underlying factors driving price increases.
Indeed, headline inflation climbed to 2.86% year-on-year (yoy) in October 2025. This surge was primarily fueled by escalating food prices, persistent supply disruptions, and a sustained increase in gold prices, all contributing to the inflationary environment.
Riefky also highlighted the critical role of maintaining external stability, citing ongoing portfolio outflows and the weakening rupiah as significant concerns. Beyond these, growing anxieties over fiscal and quasi-fiscal risks are also influencing investor sentiment regarding BI’s policy trajectory, making the central bank’s position even more complex.
“In this situation, maintaining the policy rate at 4.75% will provide the necessary anchor,” Riefky stated, emphasizing the rate’s role as a crucial reference point for the market.
He believes that the decision to hold interest rates steady can help mitigate pressure on the rupiah, simultaneously reinforcing confidence in Bank Indonesia’s policy independence and its commitment to economic stability.
Summary
Economists anticipate Bank Indonesia (BI) will maintain its benchmark interest rate at 4.75% in November 2025, primarily to safeguard rupiah stability amidst persistent global uncertainties. Josua Pardede of Bank Permata attributes this expected decision to a high-risk environment, influenced by global factors and the market’s wariness of potential US Federal Reserve rate cuts.
Teuku Riefky of LPEM UI concurs, emphasizing the necessity for a prudent policy due to rising inflation, which reached 2.86% year-on-year in October 2025, fueled by food prices and supply disruptions. He also highlights the importance of maintaining external stability against portfolio outflows and a weakening rupiah, stating that holding the rate steady provides a crucial anchor to mitigate currency pressure and reinforce confidence.
