BNI Welcomes Positive BI Rate Reduction To 5.5 Percent

Photo: Doc. Antara

JAKARTA - PT Bank Negara Indonesia (Persero) Tbk or BNI positively welcomed Bank Indonesia's (BI) decision to lower the benchmark interest rate or BI-Rate by 25 basis points (bps) to 5.50 percent.

"We positively welcome the decline in BI-Rate by 25 bps to 5.50 percent at today's Bank Indonesia Board of Governors Meeting. This policy is also in line with our estimates," said BNI Chief Economist Leo Putera Rinaldy in Jakarta, quoted by Antara, Thursday, May 22.

BNI sees that there are three main factors that underlie the decline in BI-Rate, namely strengthening the rupiah exchange rate, maintaining inflation according to BI's target, and slowing down the domestic economy.

At the same time, BI also relaxed its macropurdential policy to support banking liquidity while responding to the slowdown in credit and third-party funds (DPK).

"With the decline in the BI-Rate, we expect the SRBI-rate to fall further from the last position of 6.47 percent (SRBI-rate 12 months)," he said.

In addition, Leo continued, BI-Rate cuts could potentially reduce SBN yields due to expectations of flow of foreign funds and potential shifting funds from SRBI due to government bonds.

The rupiah exchange rate is also expected to remain stable if global risks do not change, followed by a decrease in foreign exchange demand after dividend payments and debt payment seasons in April and May.

"We also see the potential for a decrease in bank interest rates, where a decrease in interest rates will occur first followed by a decrease in credit interest rates," added Leo.

In the future, BNI estimates that there will be a BI-Rate reduction room of 25 bps again until the end of the year with the exchange rate still stable.

BI through the Board of Governors' Meeting (RDG) in May 2025 which was held on Tuesday 20 May and Wednesday 21 May decided to cut the benchmark interest rate or BI-Rate by 25 basis points (bps) to a level of 5.5 percent.

The deposit facility interest rate decreased by 25 bps to a level of 4.75 percent. Likewise, the lending facility interest rate was decided to decrease by 25 bps to a level of 6.25 percent.