Indonesia's Financial Services Authority reports financial stability maintained as October market pressures intensify

Indonesia's Financial Services Authority (OJK) has published the Financial System Stability Committee's (KSSK) assessment that fiscal, monetary and financial sector stability remained intact during the third quarter of 2026, but pressures increased in October. Tighter domestic liquidity and equity outflows compounded risks from geopolitical conflict, higher energy prices and restrictive global monetary policy. The Jakarta Composite Index fell 16.7% in October through Oct. 30 following MSCI's announcement of a consultation on Indonesia's market classification. The capital market response includes reducing the lower automatic rejection threshold from 15% to 7% and lowering the minimum share price from IDR 50 to IDR 1. OJK also reiterates the previously announced extension of share buybacks without shareholder approval through June 30, 2027. These safeguards accompany continuing reforms to ownership concentration assessments and exchange surveillance, including better detection of unusual transactions and suspected coordinated trading. They extend the market integrity agenda outlined in earlier October updates rather than constituting an entirely new reform package. Bank Indonesia maintained its policy rate at 5.75% from August through October while taking measures to support liquidity. Average reserve requirements fell on Nov. 1 from 9% to 8% for conventional banks and from 7.5% to 6.5% for Islamic banks and Islamic banking units. Further reductions to 7% and 5.5%, respectively, take effect Dec. 1. Bank lending grew 13.26% year on year in September, outpacing deposit growth of 8.22%, while the capital adequacy ratio stood at 24.30%. The Indonesia Deposit Insurance Corporation is monitoring competition for funding as deposits earning interest above its guarantee rate reached 36.06% of total deposits in September.