- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 5.75%
Bank Indonesia held the BI-Rate at 5.75% in September, with the Deposit Facility and Lending Facility rates at 4.75% and 6.50%, respectively, citing the need to stabilize the rupiah amid strong external pressure, keep inflation within the 2.5±1% target in 2026 and 2027, and support sustainable growth. Over the past year, it held the BI-Rate at 4.75% through April, raised it by 50 basis points in May and 25 basis points in June, and has since maintained 5.75%. Bank Indonesia will optimize offshore non-deliverable forward and domestic spot and domestic non-deliverable forward intervention, align money-market rates with the policy stance, maintain rupiah liquidity and strengthen incentives for foreign inflows. Consumer price inflation rose to 3.19% year on year in August, while 2026 growth is projected at 4.9%-5.7% and bank credit growth accelerated. The rupiah weakened 0.78% from end-August by September 22, while foreign-exchange reserves remained adequate. Renewed Middle East tensions lifted oil and other commodity prices, while weak global growth, rising inflation, tighter global monetary policy and high financial-market uncertainty constrained emerging-market portfolio flows. Bank Indonesia expects the rupiah to remain stable and said it will continue optimizing all monetary instruments to preserve exchange-rate stability.
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.