- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 5.75%
Bank Indonesia held the BI-Rate at 5.75% in its July 2026 decision, while keeping the Deposit Facility rate at 4.75% and the Lending Facility rate at 6.50%, saying the decision and a broader package of incentives and market measures were intended to reinforce rupiah stability amid elevated global uncertainty and keep 2026 and 2027 inflation within the government’s 2.5±1% target while macroprudential and payment-system policy stay geared to growth. The hold followed a 25 bp increase in June to 5.75%, after a 50 bp rise in May to 5.25% from 4.75% held since September 2025. Bank Indonesia said it will optimize offshore Non-Deliverable Forward, spot and Domestic Non-Deliverable Forward intervention, manage money-market rate structures in line with the policy rate, keep primary money growth above 10%, and expand incentives for foreign portfolio inflows while refining its Macroprudential Liquidity Incentive framework from September. Consumer price inflation rose to 3.34% year on year in June from 3.08% in May, 2026 growth is projected at 4.9%-5.7%, and bank credit growth accelerated to 12.67% in June. Externally, reserves stood at USD145.6 billion at end-June and the rupiah was broadly stable at Rp17,885 per USD on July 21. Bank Indonesia said the renewed US-Iran war in early July disrupted Strait of Hormuz traffic, lifted oil and other commodity prices, and left 2026 global growth weak at 3.0% with global inflation around 4.5%, and it signalled further incentives to attract inflows and support the rupiah.
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.