Bank Indonesia held the BI-Rate at 5.75% in August, citing the need to stabilise the rupiah amid global volatility from the Middle East war, keep inflation within the 2.5±1% target in 2026 and 2027, and support sustainable growth. Over the past year, it cut the rate by 25 bp to 5.00% in August 2025 and by 25 bp to 4.75% in September, before raising it by 50 bp to 5.25% in May 2026 and by 25 bp to 5.75% in June. Bank Indonesia also held the Deposit Facility rate at 4.75% and the Lending Facility rate at 6.50%, while maintaining foreign-exchange intervention and targeting double-digit base-money growth to ensure adequate liquidity. Consumer price inflation eased to 2.88% year on year in July, while second-quarter growth was 5.29% and 2026 growth is projected at 4.9-5.7%; bank lending growth accelerated to 13.58% in July. Foreign reserves stood at USD145.3 billion at end-July, equivalent to 5.5 months of imports, while the rupiah strengthened against the US dollar from end-July. The global backdrop remained weak and uncertain as the Middle East conflict lifted oil and other commodity prices, sustained global inflation pressure and tightened global monetary conditions. Bank Indonesia said it would continue strengthening its policy mix to maintain rupiah stability, control inflation and support growth.

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