- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 4.75%
Bank Indonesia left the BI-Rate at 4.75 %, with the Deposit and Lending Facility rates at 3.75 % and 5.50 %, arguing that rupiah stabilisation in the face of persistent global market volatility is essential to keep inflation on track for the 2026-27 target band of 2.5 ± 1 % while sustaining the recovery. Following 150 bp of cumulative cuts since September 2024—25 bp that month and 125 bp through 2025—the policy rate has now been steady at its post-easing low for five consecutive meetings. The central bank is reinforcing “pro-market” operations, intensifying spot, NDF and DNDF FX interventions, conducting measured secondary-market SBN purchases and flexibly managing SRBI issuance to maintain liquidity and attract foreign portfolio inflows. January CPI quickened to 3.55 % y/y from 2.92 % on a one-off electricity-tariff base effect, but core inflation held at 2.45 %; 2025 growth reached 5.11 % and is projected at 4.9–5.7 % this year, supported by 9.96 % credit growth in January, ample AL/DPK liquidity of 27.54 % and low gross NPLs of 2.05 %. Externally, the December trade surplus capped a 2025 current-account range of –0.5 % to +0.3 % of GDP, mid-February portfolio net inflows totalled USD1.6 bn and reserves stayed high at USD154.6 bn (6.3 months of imports). The rupiah, deemed undervalued, stood at IDR16,880/USD on 18 February, 0.56 % weaker than end-January, with the central bank expecting eventual firming as stabilisation measures take hold. Bank Indonesia highlighted a slowing 2026 global growth outlook of 3.2 %, lingering geopolitical risks and elevated UST yields despite scope for lower US policy rates, and reaffirmed its willingness to further ease the BI-Rate if inflation stays contained and growth requires additional support.
Rate evolution
From June 2025 to September 2026, Bank Indonesia cut the BI-Rate by 75 basis points from 5.50% to 4.75% between July and September 2025, then held it at 4.75% in October 2025 and for the following six meetings before shifting into tightening, lifting the rate to 5.50% in May 2026 and 5.75% in June 2026. The mid-2025 cuts and the October 2025 pause reflected inflation forecasts for 2025 and 2026 that remained low within the 2.5±1% target, efforts to maintain rupiah stability in the face of still-high global uncertainty, and support for growth as domestic demand and credit remained soft. At the October meeting, Bank Indonesia said it would continue to assess the transmission of the easing already delivered, the growth and inflation outlook, and rupiah stability when considering room for further BI-Rate cuts, while strengthening macroprudential policy to push lending rates lower, raise liquidity and support credit growth.
Through late 2025 and early 2026, the emphasis shifted from room for further easing to external resilience as capital flows turned more volatile, the rupiah weakened and Bank Indonesia pressed banks to pass earlier easing through to lending rates. The policy turn then hardened as turmoil from the Middle East war, higher oil prices, a stronger dollar, high US Treasury yields and foreign exchange pressures prompted Bank Indonesia to prioritise stability, with April signalling readiness to tighten further if needed, May’s increase framed as pre-emptive, and June’s further 25-basis-point increase aimed at strengthening rupiah stabilisation and keeping inflation within the 2.5±1% target in 2026 and 2027. Bank Indonesia held the BI-Rate at 5.75% from July through September as global volatility persisted, with the September decision focused on rupiah stability amid strong external pressures, the inflation target and sustainable growth, while strengthening incentives to attract foreign capital inflows and accelerating money and foreign exchange market deepening.