Bank Indonesia Cuts Key Rate to 5.25% as Trump Tariffs Threaten Growth

Bank Indonesia lowered its benchmark seven-day reverse repo rate by 25 basis points to 5.25 percent, its first reduction since May, after a two-day policy meeting that concluded on 16 July. The central bank also trimmed the deposit facility rate to 4.50 percent and the lending facility rate to 6.00 percent. Governor Perry Warjiyo said the move was consistent with stable inflation—projected at 2.5 percent ±1 point for 2025–26—and a rupiah that has strengthened 0.34 percent against the dollar in June. He added that further easing would be considered if it can be achieved without undermining currency stability. The decision comes a day after U.S. President Donald Trump announced a 19 percent tariff on imports from Indonesia, adding to external headwinds for Southeast Asia’s largest economy. A Reuters poll showed economists split on the outcome, with 15 of 29 expecting a cut and the remainder predicting a hold at 5.50 percent.