Bank Indonesia held the BI-Rate at 5.75%, the Deposit Facility rate at 4.75% and the Lending Facility rate at 6.50%. The decision supports rupiah stability amid heightened global volatility, aims to keep inflation within the 2.5% plus or minus 1 percentage point target range in 2026 and 2027, and maintains support for economic growth. The central bank projects growth of 4.9% to 5.7% in 2026, while annual inflation eased to 2.88% in July. The central bank expanded the foreign funding transactions eligible for a 12.5% premium reduction on Swap Sell Hedging, also described as Swap Buy Hedging to Bank Indonesia. Eligibility will extend beyond portfolio inflows to banks’ foreign loans and foreign direct investment entering Indonesia from July 1, 2026, with implementation from the second week of September. The transactions may have a maximum tenor of 12 months and a contract period of up to three years, with rollovers permitted within the remaining contract maturity. Bank Indonesia will also continue offshore non-deliverable forward intervention and domestic spot and domestic non-deliverable forward transactions, while targeting primary money growth above 10% to maintain liquidity. The Macroprudential Liquidity Incentive Policy for Money Market Deepening will take effect on September 1, 2026, followed by the Inclusive Macroprudential Financing Ratio policy on October 1. Bank Indonesia is also preparing to expand the 0% Quick Response Code Indonesian Standard merchant discount rate to transactions of up to IDR 100,000 from October 1.

Original source