Bank Indonesia is focusing on maintaining stability amidst global uncertainties following Donald Trump’s re-election. Governor Perry Warjiyo stated that the central bank’s priority is to keep the rupiah stable in the short term while looking for opportunities to potentially lower interest rates in 2025.
Warjiyo highlighted the impact of Trump’s ‘U.S. first’ policies on the global economy, warning of potential trade wars and high tariffs that could lead to a decline in global growth. Despite the uncertainties, Indonesia’s economy is expected to remain relatively strong compared to other countries like China and Europe.
The central bank previously cut interest rates in September but has kept the key rate at 6% since then, citing increased volatility in the rupiah. The currency has faced pressure due to capital outflows following Trump’s victory, making it crucial for Bank Indonesia to focus on stabilization.
Warjiyo emphasized the importance of using other instruments to support growth and collaborating with the government to withstand external shocks. The central bank forecasts Indonesia’s economy to grow by 4.8%-5.6% in 2025 and 4.9%-5.7% in 2026, with inflation expected to remain within the target range of 1.5% to 3.5%.
Looking ahead, Bank Indonesia anticipates a current account deficit of 0.5% to 1.3% of GDP next year, widening to 0.6% to 1.4% in 2026. Loan growth is projected to be between 11% to 13% annually in the next two years, showing an increase from the estimated 10%-12% this year.
In conclusion, Bank Indonesia is prepared to navigate through the challenges posed by global uncertainties and ensure stability in the Indonesian economy. The central bank will continue to monitor the situation closely and take necessary measures to support growth and maintain financial stability in the country.
