Unchanged at 5.75%, but Rupiah risks keep the door open
Bank Indonesia (BI) held its policy rate at 5.75% at the July meeting, maintaining a pro-stability stance after 100bps of cumulative tightening. The decision defied market expectations of a further 25bps rate hike
- BI also held the deposit and Lending Facility Rates at 4.75% and 6.50%, respectively.
- Statement highlight: BI reiterated that the current policy rate remains consistent with efforts to “further strengthen Rupiah stability amid persistently elevated global uncertainty” while keeping inflation within its 1.5% – 3.5% target range in 2026-2027. The statement shifted focus toward non-rate measures: broader incentives to attract foreign portfolio inflows, deepen money and FX markets, and reduce liquidity segmentation in the banking system. BI also expanded its FX stabilisation toolkit and macroprudential support to reinforce this policy mix.
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