Macroeconomic Analysis Series: BI Board of Governors Meeting, September 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)
Faradina Alifia Maizar: 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 202509, LPEM FEBUI BI Board of Governor Meeting Brief from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: An increase in food prices was offset by softening personal care and transport costs, bringing Indonesia’s headline inflation down to 2.31% (y.o.y) in August 2025, well within Bank Indonesia’s 1.5-3.5% target band. Core inflation moderated to 2.17% (y.o.y), suggesting weak domestic demand. Externally, portfolio inflows lifted Rupiah earlier in September, but sentiment turned after the cabinet reshuffle and concerns over fiscal-monetary coordination, prompting outflows and renewed depreciation pressures. In this context, we view that Bank Indonesia should keep BI rate at 5.00% in September 2025 after delivering two consecutive rate cuts in July and August, to evaluate the effectiveness of recent policy transmission while closely monitoring Rupiah volatility.

Keywords: gdp; —; economic; —; economic; outlook; —; inflation; —; macroeconomics; —; interest; rate (search for similar items in EconPapers)
Date: 2025-09, Revised 2025-09
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