- Decision
- Maintain
- Rate change
- 0 bps
- BI-rate
- 5.75%
Bank Indonesia held the BI-Rate at 5.75% to stabilise the rupiah amid strong external pressures and keep inflation within target, while maintaining growth-supportive macroprudential policies, following a 25-basis-point increase to that level in June. The central bank raised its Deposit Facility rate to 5.00%, announced phased reductions in rupiah reserve requirements effective 1 November and 1 December 2026 to bolster liquidity, and strengthened domestic non-deliverable forward hedging incentives to attract foreign capital. September consumer price inflation stood at 3.28% year on year, within the 2.5±1% target for 2026 and 2027, as food inflation increased despite easing core and administered-price inflation. Bank Indonesia projected economic growth of 4.9–5.7% in 2026, supported by government stimulus and improving economic expectations, while bank lending remained strong. The rupiah weakened against the US dollar between end-September and 20 October amid geopolitical tensions, tighter US monetary policy and foreign equity investor sentiment. Escalating conflict in the Middle East kept oil and commodity prices elevated, with global monetary policy expected to remain tight for longer. Bank Indonesia signalled it would optimise its monetary instruments and make necessary adjustments to strengthen external resilience and preserve economic stability.
Rate evolution
From June 2025 to October 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 October, with the 20-21 October 2026 decision maintaining the focus on rupiah stability amid strong external pressures and the inflation target for 2026 and 2027, while raising the Deposit Facility rate to 5.00% and strengthening incentives for Domestic Non-Deliverable Forward (DNDF) hedging transactions with Bank Indonesia to attract foreign capital inflows and deepen money and foreign exchange markets.