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 4.25% and its lending facility rate to 6.0%.



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