BI Rate Projection Economists Remain Detained At 5.75 Percent

JAKARTA - Banjaran Chief Economist of Bank Syariah Indonesia (BSI) Surya Indrastomo projects that the benchmark interest rate of Bank Indonesia (BI) or BI-Rate will remain held at the level of 5.75 percent in a meeting of the board of governors (RDG) in April, which will be announced this Wednesday.

According to its projection, BI will still hold the benchmark interest rate or BI-Rate until the third quarter of this year, in line with the Federal Reserve (The Fed) when adjusting interest rates or Fed Funds Rate (FFR) in the United States (US).

"Our position is still holding interest rates until the third quarter, mirroring Fed adjustments. We looked at the momentum optimally last month, when the rupiah pressure was not as strong as it is now. The current position is because the rupiah is still under pressure and to maintain the attractivity of securities," said Banjaran, quoted by Antara, Wednesday, April 23.

Meanwhile, BSI sees that the space for lower interest rates will occur twice in 2025, each with 25 basis points (bps) in the third and fourth quarters of this year.

PermataBank's Head of Macroeconomic and Financial Market Research Faisal Rachman also estimates that BI-Rate will remain in custody at the level of 5.75 percent in the announcement of the results of the RDG BI in April.

He noted that global uncertainty stemming from trade wars was still quite high.

This results in capital outflows and pressure on the rupiah which will increase the risk of imported inflation. The trade war will also have an impact on widening the current account balance deficit.

"All in all, we are still looking too early to cut interest rates. So, BI will still be pro-stability at this time," said Faisal.

According to him, in the future the BI-Rate pruning space will indeed open. However, the decline in BI-Rate must wait for the right time or timing, at least when uncertainty and concerns related to the trade war begin to consistently subside.

PermataBank still predicts that the BI-Rate will be maintained until the end of the year. However, if there is a signal that the Fed will be more aggressive in cutting the FFR, there will be a BI-Rate pruning room of up to 50bps.

"But the challenge is that this tariff policy can make US inflation difficult to decline. So it will be a dilemma for the Fed," said Faisal.