JAKARTA - Bank Permata Chief Economist Josua Pardede predicts that Bank Indonesia (BI) will tend to maintain the BI-Rate at the level of 4.75 percent at the December 2025 Governor's Board Meeting (RDG).
However, he added that the room for a rate cut was actually still open, supported by the Fed's rate cuts as well as a more dovish policy stance in the December 2025 FOMC statement.
On the domestic side, Josua said that inflation remained within the BI target range of 1.5 percent to 3.5 percent and the continued trade balance surplus also opened opportunities for BI to carry out BI-Rate cuts.
In addition, he added that market volatility and five-year Credit Default Swap (CDS) also showed a downward trend.
"However, global investors still tend to be risk-off and continue to wait-and-see actions, which in turn impacts capital flows, which in turn impacts the movement of the Rupiah exchange rate, which is currently in a sideways trend," he said in a statement, Wednesday, December 17.
Josua said the weakening of economic data in the Asia Pacific region, especially from China, also increased the risk to the regional economic outlook, although Indonesia's economic fundamentals are still relatively solid.
"The risk of widening Indonesia's fiscal deficit amid the pro-growth agenda also makes global investors more cautious," he explained.
In addition, Josua said that changes in regulations at the end of the year, including rules related to the Foreign Exchange from the Export of Natural Resources (DHE SDA), also increased uncertainty and strengthened investors' cautious attitude.
According to him, the combination of these two opposite conditions is a challenge for BI in assessing risks and determining the direction of interest rate policy at the December 2025 RDG and currently, the risks to the stability of the rupiah exchange rate are considered more dominant so that BI-Rate is likely to be maintained.
"However, if, ahead of the announcement of the RDG results, the condition of the rupiah is able to reverse direction significantly, then BI could shift back from maintaining stability in the short term to returning to pro-growth and cutting the BI rate by 25bps to 4.50 percent," he explained.
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