REPUBLIKA.CO.ID, JAKARTA — Institute for Development of Economics and Finance (Indef) Senior Economist Fadhil Hasan said Bank Indonesia's move to lower its benchmark interest rate to 4.75 percent was contradictory to the government's claim that economic growth had reached 5.12 percent.

“The recent series of expansionary fiscal and loose monetary policies intended to boost economic growth seems to contradict the data presented by the government itself, which states that economic growth is 5.12 percent,” Fadhil said, Thursday (18/9/2025).

According to Fadhil, if the 5.12 percent growth figure is correct, policy should be directed at maintaining stability, not fiscal and monetary loosening which is happening right now. But if the easing continues, it means that economic conditions are actually weakening.

“If these data are correct then fiscal and monetary policy is to exercise stability as the economy starts to move. Or, in fact, the state of our economy is not as suggested by the data?” he questioning.

Fadhil also cast doubt on the effectiveness of the BI Rate decline in encouraging credit interest. He assessed interest on bank loans as likely to be sticky so new adjustments would be felt in the long term.

“Whether this BI rate reduction policy will be able to lower the interest rate on loans is still a big question,” he stressed.

In addition, he criticized the risks of BI independence. According to him, monetary easing in conjunction with fiscal expansion gives the impression of BI not being independent.

“The rest of this policy could further make BI look less independent so that its credibility is called into question,” he said.

Previously, Central Bank (Bank Indonesia) lowered the BI Rate 25 basis points to 4.75 percent in the Board of Governors Meeting (RDG) 16—17 September 2025. The Deposit Facility rate fell to 3.75 percent and the Lending Facility to 5.50 percent. Governor of the Indonesia Central Bank Perry Warjiyo confirmed that the easing was done to promote economic growth while maintaining inflation and the stability of the rupiah.

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