THE RELATIONSHIP BETWEEEN INTEREST RATES, INFLATION,AND PUBLIC PURCHASING POWER IN 2025
Keywords:
Ekonomi Digital, Inflation , Public purchasing powerAbstract
This study aims to analyze the relationship between interest rates, inflation, and purchasing power in Indonesia in 2025. These three variables are closely related in determining national economic stability. Bank Indonesia's benchmark interest rate hikes are typically a response to rising inflation, but on the other hand, such policies can suppress purchasing power by increasing borrowing costs and reducing consumption. This study uses a qualitative descriptive approach based on secondary data from Bank Indonesia reports, the Central Statistics Agency (BPS), and several macroeconomic literature. The study results indicate that in 2025, although inflation is relatively controlled within Bank Indonesia's target range, purchasing power will experience pressure due to high real interest rates and slowing economic growth post- pandemic. These findings emphasize that monetary stability must be balanced with fiscal policies that support purchasing power, such as subsidies, controlling food prices, and increasing public income.
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