Bank Indonesia Delivers First Rate Hike Since 2024

2026-05-20 07:46 By Czyrill Jean Coloma 1 min. read

Bank Indonesia raised its benchmark interest rate by 50 bps to 5.25% at its May 2026 policy meeting, delivering a larger-than-expected increase as markets had anticipated a 25 bps hike to 5%.

The move marked the central bank’s first rate hike since April 2024, aiming to strengthen the rupiah, curb imported inflation risks, and keep inflation within the government’s 2.5% ±1% target range.

The rupiah weakened 2.2% from end-April to Rp17,700 per US dollar on May 19.

Meanwhile, annual inflation eased to 2.42% in April 2026 from 3.48% in March, the lowest since August 2025 and still within the central bank’s target range.

The decision aligns with the “pro-stability” focus of monetary policy aimed at strengthening Indonesia’s external resilience amid global uncertainty.

Meanwhile, macroprudential and payment system policies remain geared toward supporting growth (“pro-growth”).

The central bank also raised its overnight deposit facility rate to 4.75% and its lending facility rate to 6.0%.



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Bank Indonesia Delivers First Rate Hike Since 2024
Bank Indonesia raised its benchmark interest rate by 50 bps to 5.25% at its May 2026 policy meeting, delivering a larger-than-expected increase as markets had anticipated a 25 bps hike to 5%. The move marked the central bank’s first rate hike since April 2024, aiming to strengthen the rupiah, curb imported inflation risks, and keep inflation within the government’s 2.5% ±1% target range. The rupiah weakened 2.2% from end-April to Rp17,700 per US dollar on May 19. Meanwhile, annual inflation eased to 2.42% in April 2026 from 3.48% in March, the lowest since August 2025 and still within the central bank’s target range. The decision aligns with the “pro-stability” focus of monetary policy aimed at strengthening Indonesia’s external resilience amid global uncertainty. Meanwhile, macroprudential and payment system policies remain geared toward supporting growth (“pro-growth”). The central bank also raised its overnight deposit facility rate to 4.75% and its lending facility rate to 6.0%.
2026-05-20
Indonesia Holds Rates Steady to Support Rupiah
Bank Indonesia (BI) kept its benchmark interest rate unchanged for the seventh straight month at 4.75% at its April 2026 policy meeting, in line with market expectations and aimed at supporting the rupiah and economic growth. The rupiah weakened to Rp17,140 per US dollar on April 21, 2026, a 0.87% decline from end-March levels, as escalating Middle East tensions triggered capital outflows from emerging markets. Meanwhile, BI expects inflation to remain within its 2026–2027 target range of 2.5% ±1%. The annual inflation rate slowed to a three-month low of 3.48% in March 2026 from 4.76% in February, within the central bank’s 1.5%–3.5% target range. Despite global headwinds, the central bank maintained its economic growth forecast of 4.9%–5.7% for 2026. Indonesia’s GDP expanded 5.39% yoy in Q4 2025, accelerating from 5.04% in Q3 and marking the strongest growth since Q3 2022. The central bank also left its overnight deposit facility rate at 3.75% and its lending facility rate at 5.50%.
2026-04-22
Indonesia Holds Rates Steady as Expected
Bank Indonesia held its benchmark interest rate steady at 4.75% during its March 2026 policy meeting, in line with market expectations. The decision aims to bolster the stability of the Rupiah while keeping inflation within the central bank’s 2026–2027 target of 2.5% ±1%. The Rupiah weakened to Rp16,985 per US dollar on March 16, 2026, a 1.29% decline from end-February levels, as escalating Middle East tensions triggered capital outflows from emerging markets. Meanwhile, the annual inflation rate rose to 4.76% in February 2026 from 3.55% in January, marking its highest level since March 2023. Despite global headwinds, the central bank maintained its economic growth forecast of 4.9%–5.7% for 2026. Indonesia’s GDP grew 5.39% year-on-year in Q4 2025, accelerating from 5.04% in the previous quarter and marking the strongest economic expansion since Q3 2022. The central bank also kept its overnight deposit facility rate at 3.75% and its lending facility rate at 5.50%.
2026-03-17