Macroeconomic Analysis Series: BI Board of Governors Meeting, May 2025

Jahen F. Rezki (), Teuku Riefky (), Faradina Alifia Maizar (), Difa Fitriani (), Mervin Goklas Hamonangan (), Hardy Salim () and Alif Ihsan A Fahta ()
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Jahen F. Rezki: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)
Teuku Riefky: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)
Alif Ihsan A Fahta: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)

No 202505, LPEM FEBUI BI Board of Governor Meeting Brief from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: Headline inflation rose to 1.95% (y.o.y.) in April 2025, returning to Bank Indonesia’s target range of 1.5–3.5%, up from 1.03% in March. This increase followed the expiry of the 50% electricity tariff discount for households with a power capacity of up to 2,200 VA. Core inflation also accelerated, driven by higher gold and car prices. Despite uncertainty over President Trump's tariff policies, between mid-April and mid-May, Rupiah appreciated by 1.70%, from IDR16,795 to IDR16,510 per US dollar, supported by easing trade tensions and Bank Indonesia’s intervention to stabilise the exchange rate. These actions contributed to a USD4.6 billion decline in foreign exchange reserves, the steepest monthly drop in two years. The recent inflation figure and currency stability suggest some room for monetary easing. However, it remains unclear whether this stability will be sustained. Given lingering external risks, Bank Indonesia should keep BI Rate at 5.75% and remain cautious until global conditions become more predictable.

Keywords: gdp; —; economic; —; economic; outlook; —; inflation; —; macroeconomics; —; interest; rate (search for similar items in EconPapers)
Date: 2025-05, Revised 2025-05
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