The Bank Indonesia (BI) interest rate hike cycle is expected to soon\nenter its final phase. HSBC assesses that BI will likely raise the\nbenchmark interest rate only one more time towards the end of 2026\nbefore concluding the period of monetary tightening.<\/p>\n
According to HSBC Chief Asia Economist & Co-head of Global\nInvestment Research Asia, Frederic Neumann, BI has taken aggressive\nsteps since the beginning of the year to maintain the stability of the\nRupiah exchange rate. He believes that most efforts to dampen pressure\non the Rupiah have already been implemented.<\/p>\n
\u201cWe are almost at the end of the monetary tightening cycle in\nIndonesia. We have seen BI take very aggressive steps at the beginning\nof this year, so they have already undertaken most of the efforts to\nstabilise the Rupable exchange rate,\u201d Frederic stated during the HSBC\nIndonesia Summit 2026 Media Briefing in South Jakarta on Tuesday\n(29\/09\/2026).<\/p>\n
\u201cWe expect there to be one more interest rate hike towards the end of\nthis year, but after that, the tightening cycle will end,\u201d he\nexplained.<\/p>\n
Frederic explained that thanks to BI\u2019s aggressive measures, the\nstability of the Rupiah exchange rate is now becoming visible and has\nproven capable of attracting foreign capital inflows back into the\ndomestic financial market. Moving forward, the movement of the \u2018Garuda\u2019\ncurrency is projected to be relatively limited.<\/p>\n
\u201cYou have already seen stability in the Rupiah exchange rate and the\nreturn of capital inflows. Therefore, we expect that next year, the\nmovement of the Rupiah exchange rate will remain within a relatively\nnarrow range,\u201d said Frederic.<\/p>\n
He added that if there are policy adjustments outside of the\nbenchmark interest rate hike, BI is expected to only need to utilise the\nBank Indonesia Rupiah Securities (SRBI) instrument periodically to\nabsorb liquidity.<\/p>\n
\u201cIf there are policy changes outside of that one interest rate hike,\nBI might occasionally use SRBI to absorb some liquidity to adjust\nmonetary conditions more precisely. However, this would only be a minor\nadjustment,\u201d he noted.<\/p>\n
Furthermore, Frederic emphasised that the monetary tightening\nimplemented by BI will not hinder the pace of national economic growth.\nThis is evident from the growth in bank credit distribution, which is\nactually accelerating for both investment and working capital.<\/p>\n
\u201cDoes it hinder growth? We do not see such an impact. If we observe\nthe growth of bank credit distribution, investment credit is actually\nexperiencing significant acceleration, as is working capital credit,\u201d he\nsaid.<\/p>\n
\u201cSo, even with additional monetary tightening and a stable Rupiah\nexchange rate, the acceleration of bank credit growth indicates that the\ntightening measures taken are not excessive,\u201d concluded Frederic.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/will-bank-indonesia-raise-interest-rates-again-here-is-hsbcs-prediction-1790700703", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }