Bank Indonesia’s Board of Governors kept the BI-Rate at 4.75% alongside the 3.75% Deposit Facility and 5.50% Lending Facility rates, citing the need to defend rupiah stability against heightened Middle-East war shocks and to keep 2026-2027 inflation within the 2.5 ± 1% target while supporting growth. After a cumulative 150 bp easing cycle between September 2024 (-25 bp) and end-2025 (-125 bp), the policy rate has been unchanged in 2026. The central bank continues its “pro-market” operations framework, including spot, DNDF and offshore NDF interventions, calibrated SBN purchases and liquidity management to draw portfolio inflows and ensure money-market liquidity. Consumer price inflation jumped to 4.76% y/y in February, driven by last year’s electricity-tariff base effect, while core inflation stayed anchored at 2.63% y/y; Bank Indonesia still sees full-year CPI inside the target band. GDP momentum improved in Q1, underpinned by domestic demand, and the bank maintains a 4.9–5.7% growth outlook, supported by 9.37% y/y credit expansion in February. On the external side, the January trade surplus narrowed to USD1.0 bn, March portfolio outflows reached USD1.1 bn, yet reserves were stable at USD151.9 bn (6.1 months of imports). Globally, the war-driven oil spike, stronger USD and rising UST yields have cut the 2026 world growth forecast to 3.1% and pushed global inflation to 4.1%, limiting room for major central-bank easing. Bank Indonesia pledges to intensify FX interventions, ref

Original source View in tracker