The government still needs to improve economic fundamentals, policy\ngovernance, and law enforcement.<\/p>\n
KOMPAS<\/p>\n
By Nina Susilo, Iqbal Basyari<\/p>\n
23 Jul 2026 13:44 WIB \u00b7 Ekonomi & Bisnis<\/p>\n
JAKARTA, KOMPAS \u2013 The decision by Bank Indonesia to maintain the\ninterest rate at 5.75 percent is appreciated as a cautious step that\ncould encourage capital inflow. However, this relatively high maintained\ninterest rate still carries risks and wide-ranging impacts.<\/p>\n
\u201cBank Indonesia\u2019s decision to maintain the BI Rate at 5.75 percent is\na prudent and measured step amidst the increasing global uncertainty,\u201d\nsaid Shinta Kamdani, Chairperson of the Indonesian Employers\u2019\nAssociation (Apindo), when contacted on Thursday (23\/7\/2026).<\/p>\n
Previously, within a month, BI had taken quite aggressive interest\nrate policies. On May 19-20, 2026, BI raised its benchmark interest rate\nby 50 basis points from 4.75 percent to 5.25 percent.<\/p>\n
Subsequently, on June 9, 2026, BI also raised the interest rate by 25\nbasis points to 5.50 percent. This action was taken outside the monthly\nschedule amid a sharp depreciation of the rupiah. On June 17-18, 2026,\nBI again increased the benchmark interest rate to 5.75 percent.<\/p>\n
In the monthly Governor\u2019s Board Meeting (RDG) on July 21-22, 2026, in\naddition to maintaining the benchmark interest rate, BI also did not\nchange the Deposit Facility and Lending Facility rates by 25 basis\npoints (bps), remaining at 4.75 percent and 6.5 percent,\nrespectively.<\/p>\n
Bank Indonesia believes that the increasing uncertainty in the global\neconomy and financial markets necessitates a strengthening of responses\nand synergy between fiscal and monetary policies to enhance external\nresilience, maintain stability, and encourage domestic economic\ngrowth.<\/p>\n
According to Shinta, the decision to maintain interest rates provides\nsome leeway for the real sector. Moreover, considering that BI had\npreviously raised the benchmark interest rate quite aggressively.<\/p>\n
Globally, the re-escalation of conflict in the Middle East has pushed\noil prices back above US$90 per barrel. Furthermore, expectations of\nhigher-for-longer US central bank policy, the Federal Reserve (The Fed),\ncontinue to exert pressure on financial markets and exchange rates in\ndeveloping countries, including Indonesia.<\/p>\n
In this situation, according to Shinta, the business world continues\nto view macroeconomic stability as an important prerequisite for the\nsustainability of investment and business activities. However, at the\nsame time, this stability needs to be balanced with sufficient space for\nthe real sector to continue to grow and expand.<\/p>\n
Although the decision to maintain the BI Rate provides a positive\nsignal as it does not add new pressure on business financing, Shinta\nacknowledges that the challenges faced by business actors at present\nhave not fully diminished.<\/p>\n
Amidst the re-escalation of geopolitical dynamics, the business world\nis still facing multiplier effects such as high production costs due to\nrising energy and raw material prices, exchange rate volatility, and\nvarious components of the high-cost economy at the domestic level.<\/p>\n
\u201cOn the other hand, the impact of rising interest rates in recent\nmonths has also begun to be felt through increased capital costs and\nloan interest, particularly for companies that rely on bank financing\nfor working capital and investment,\u201d he stated.<\/p>\n
Therefore, according to Shinta, the business world views that\nstability and growth are not two conflicting objectives, but rather must\nproceed in tandem.<\/p>\n
Maintaining macroeconomic stability will enhance market confidence\nand provide certainty for business actors. The continuity of investment\nand activities in the productive sector is a crucial factor in\nsustaining economic growth momentum, strengthening competitiveness, and\ncreating job opportunities.<\/p>\n
He also assessed that the main challenge at present is no longer\nsolely the interest rate level, but how to maintain a balance between\nmacroeconomic stability and the momentum of growth in the real sector.\nThe business world requires stability, but it also needs a conducive\nfinancing climate so that investment, business expansion, and job\ncreation can continue to progress.<\/p>\n
\u201cGoing forward, APINDO hopes that BI will continue to prioritize a\nbalanced and data-dependent policy mix, so that exchange rate stability\nis maintained without excessive pressure on the productive sector.\nFurthermore, coordination between monetary and fiscal policies also\nneeds to be continuously strengthened,\u201d he said.<\/p>\n
The government also appreciates Bank Indonesia\u2019s decision to maintain\nthe BI Rate. Coordinating Minister for Economic Affairs Airlangga\nHartarto believes that the increase in interest rates will still have an\nimpact on the real sector.<\/p>\n
\u201cBy holding this, we hope the real sector can continue to move. After\nall, raising (interest rates) is the same as stepping on the brakes,\u201d he\ntold reporters at the Presidential Palace Complex in Jakarta on\nWednesday (July 23, 2026).<\/p>\n
Although the rupiah has only strengthened slightly, according to\nAirlangga, economic growth and credit growth are more important. By\nkeeping the interest rate at 5.75 percent, credit growth is expected to\nbe stimulated.<\/p>\n
Contacted separately, University of Indonesia economist Kiki Verico\nassessed that the decision to hold interest rates showed that BI was\nquite confident that capital inflow had occurred, although it might not\ncome from long-term foreign investment (FDI).<\/p>\n
So far, according to Kiki, although interest rates were raised for\nthe first time in May and for the second and third times in the\nfollowing month, the value of the rupiah continued to weaken. However,\nwhen government policies in the real sector, including law enforcement\nactions, met market expectations, the value of the rupiah began to\nstrengthen slightly.<\/p>\n
According to him, the stabilization of the rupiah\u2019s value currently\nheavily depends on investor expectations. Moreover, export performance\nappears to be declining with nickel dem<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/bi-rate-on-hold-a-cautious-move-that-could-backfire-1784796613", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }