Bank Indonesia May Cut Rates Again in June if Rupiah Remains Stable – Barclays

Bank Indonesia Could Cut Rates Again in June if Rupiah Remains Stable – Barclays

Rupiah Stability May Give BI Room for Further Policy Easing

Bank Indonesia may consider another 25 basis point rate cut this month, bringing the policy rate down to 5.25%, according to Barclays economists Brian Tan and Hongying Liu. The move would follow May’s rate cut and would depend largely on the stability or strengthening of the Indonesian Rupiah (USD/IDR).

“If USD/IDR remains broadly stable or even declines, BI may spot an opportunity to cut again in June,” Barclays noted in a recent research report.

Further Easing Expected in 2H 2025

Barclays expects two more 25bps cuts in Q3 and Q4, citing the central bank’s increased tolerance for current account slippage in this monetary cycle. Unlike past tightening cycles, Bank Indonesia seems less sensitive to trade and current account balances, and more focused on managing FX volatility and supporting growth.

Trade Surplus Decline Unlikely to Deter BI

Indonesia’s sharp drop in April’s trade surplus is unlikely to be a deterrent to easing, as BI is currently prioritizing macroeconomic stability and currency control over short-term current account metrics.

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