The Bank Indonesia Board of Governors\u2019 Weekly Meeting on Tuesday, 9\nJune 2026, decided to raise the BI-Rate by 25 basis points to 5.50%, the\nDeposit Facility rate by 25 basis points to 4.50%, and the Lending\nFacility rate by 25 basis points to 6.25%. Governor Perry Warjiyo stated\nin a press release that the increase is a follow-up measure to\nstrengthen rupiah exchange rate stabilisation from the impact of high\nglobal volatility due to the Middle East conflict, as well as a\npre-emptive step to ensure inflation in 2026 and 2027 remains within the\ngovernment\u2019s target range of 2.5% plus or minus 1%.<\/p>\n
In addition to the BI-Rate hike to 5.50%, Bank Indonesia is taking\nsteps to strengthen rupiah exchange rate stabilisation by increasing\nyields and providing several incentives in monetary operations to\nattract foreign investment flows. The measures include a rise in the\ninterest rate structure for Bank Indonesia Rupiah Securities across all\ntenors of 6, 9, and 12 months to boost returns for foreign portfolio\ninvestment. This adjustment follows market mechanisms and is intended to\nkeep portfolio investment in Indonesia competitive with other\ncountries.<\/p>\n
The central bank is also offering an incentive in the form of a 10%\nreduction in hedging swap rates for foreign investors to further enhance\nattractiveness and compensate for their existing obligations. Bank\nIndonesia noted that it has been providing swap hedging facilities for\nforeign investment inflows through Indonesian banks, which then pass\nthem on to the central bank, while regular swap rate determination\ncontinues according to prevailing market mechanisms.<\/p>\n
Furthermore, Bank Indonesia announced the reopening of repurchase\nagreement (repo) instrument auction windows for 3, 6, 9, and 12-month\ntenors for banks to ensure sufficient liquidity in the money market and\nbanking sector, with the aim of keeping primary money growth in double\ndigits above 10%. The expansion of repo facilities will become the main\ninstrument for monetary liquidity management compared to other\nmechanisms, including the purchase of government bonds from the\nsecondary market. The bank will also increase the intensity of monetary\noperations in both rupiah and foreign exchange to strengthen rupiah\nstabilisation. Rupiah monetary operations will be enhanced by opening\nSRBI auctions twice a week, while foreign exchange operations will\ncontinue with increased intervention intensity through spot and domestic\nnon-deliverable forward transactions as well as non-deliverable forward\ntransactions in overseas markets.<\/p>\n
Bank Indonesia emphasised it will continue to strengthen monetary\npolicy coordination with the government\u2019s fiscal policy to support\nrupiah stabilisation. In its evaluation since the monthly Board of\nGovernors Meeting on 19-20 May 2026, the rupiah exchange rate showed\nweaker development than expected, driven not only by ongoing global\nvolatility and high domestic foreign exchange demand but also by foreign\nportfolio investment outflows from Indonesia. In response, Bank\nIndonesia deemed it necessary to take further steps to strengthen rupiah\nstabilisation by again increasing yields and offering other incentives\nto encourage foreign investment inflows, aiming to preserve Indonesia\u2019s\nexternal economic resilience and achieve the 2026 and 2027 inflation\ntargets.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/bank-indonesia-announces-surprise-rate-hike-for-june-2026-1780991121", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }