Jakarta. Economists are divided on whether Bank Indonesia (BI) should deliver another rate cut in its upcoming Board of Governors Meeting on Oct. 21–22, with some urging the central bank to act now before currency and inflation risks intensify later this year.

Bank Danamon economist Hosianna Evalita Situmorang said October could be the last window for BI to trim its policy rate this year. She expects the benchmark rate to fall to 4.5 percent from the current 4.75 percent.

“This could be the final room for BI to cut rates this year, considering the limited opportunity toward year-end amid potential exchange rate and inflation pressures,” Hosianna told reporters on Tuesday.

BI has lowered its benchmark rate six times since September 2024, bringing the Deposit Facility rate to 3.75 percent and the Lending Facility rate to 5.5 percent.

Hosianna added that with inflation staying stable and domestic consumption remaining weak, BI should continue its easing cycle to support economic growth.

“Given the ample domestic liquidity, further rate cuts are necessary,” she said.

On the other hand, Paramadina University economist Wijayanto Samirin urged caution, arguing that BI has already been too aggressive. He believes the central bank should maintain the rate at 4.75 percent to preserve its policy space.

“There’s a tendency for BI to cut again. I hope not, though. BI should take a more conservative stance and save its ammunition,” Wijayanto said.

He added that the transmission from BI’s benchmark rate to lending and funding rates in the financial sector remains sluggish due to inefficiencies and external factors.

“The financial sector’s performance has not been efficient, distracted by factors such as government bond yields, weak demand, and global dynamics,” Wijayanto concluded.

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