- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 4.75%
Bank Indonesia’s Board of Governors kept the BI-Rate at 4.75% alongside the 3.75% Deposit Facility and 5.50% Lending Facility rates, citing the need to defend rupiah stability against heightened Middle-East war shocks and to keep 2026-2027 inflation within the 2.5 ± 1% target while supporting growth. After a cumulative 150 bp easing cycle between September 2024 (-25 bp) and end-2025 (-125 bp), the policy rate has been unchanged in 2026. The central bank continues its “pro-market” operations framework, including spot, DNDF and offshore NDF interventions, calibrated SBN purchases and liquidity management to draw portfolio inflows and ensure money-market liquidity. Consumer price inflation jumped to 4.76% y/y in February, driven by last year’s electricity-tariff base effect, while core inflation stayed anchored at 2.63% y/y; Bank Indonesia still sees full-year CPI inside the target band. GDP momentum improved in Q1, underpinned by domestic demand, and the bank maintains a 4.9–5.7% growth outlook, supported by 9.37% y/y credit expansion in February. On the external side, the January trade surplus narrowed to USD1.0 bn, March portfolio outflows reached USD1.1 bn, yet reserves were stable at USD151.9 bn (6.1 months of imports). Globally, the war-driven oil spike, stronger USD and rising UST yields have cut the 2026 world growth forecast to 3.1% and pushed global inflation to 4.1%, limiting room for major central-bank easing. Bank Indonesia pledges to intensify FX interventions, refine monetary instruments and reinforce macroprudential and payment-system measures, and stands ready to recalibrate its mix to safeguard stability and sustain the recovery.
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.