The Institute for Economic and Social Research, Faculty of Economics\nand Business, University of Indonesia (LPEM FEB UI) has assessed that\nBank Indonesia (BI) should maintain its benchmark policy rate, or\nBI-Rate, at 4.75 per cent. LPEM believes this approach could preserve\nrupiah stability and contain inflation.<\/p>\n
LPEM UI researcher Jahen Fachrul Rezki explained that Indonesia\nrecorded year-on-year inflation of 4.76 per cent in February 2026,\nexceeding Bank Indonesia\u2019s target range of 1.5-3.5 per cent. This\ninflation was caused by the low-base effect from electricity tariff\ndiscounts in early 2025.<\/p>\n
According to Jahen, inflation has risen moderately. \u201cHowever, the\nUS-Iran conflict has created import inflation risks through rising\nglobal energy prices, whilst also raising concerns over Indonesia\u2019s\nability to maintain its budget deficit ceiling of 3 per cent,\u201d said\nJahen in the Macroeconomic Analysis Series report, cited on Tuesday, 17\nMarch 2026.<\/p>\n
LPEM also highlighted a series of negative outlook revisions from\nrating agencies that have worsened market sentiment. As is known,\nMoody\u2019s and Fitch Ratings have downgraded Indonesia\u2019s debt outlook from\nstable to negative.<\/p>\n
Jahen noted that foreign investors recorded net capital outflows of\nUS$0.75 billion. Bond outflows reached US$0.77 billion, partially offset\nby equity inflows of US$0.3 billion as foreign investors selectively\npurchased energy sector stocks.<\/p>\n
\u201cIn these circumstances, Bank Indonesia has limited room to cut\ninterest rates, and we believe that Bank Indonesia should maintain the\nBI-Rate at 4.75 per cent to preserve rupiah stability and control\ninflation,\u201d said Jahen.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/lpem-ui-assesses-bank-indonesia-should-maintain-policy-rate-1773719709", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }