Analyst: BI Rate at 5.75% Not a Surprise for the Market
Trimegah Sekuritas Indonesia chief economist Fakhrul Fulvian assessed that Bank Indonesia’s decision to hold the BI Rate at 5.75% at the August 2026 Board of Governors Meeting was not a surprise for the market. He said it was in line with expectations, adding that a shift in policy focus is beginning to appear in Bank Indonesia’s official statements.
According to Fakhrul, over the past few months Bank Indonesia has been in a stabilisation phase, with the main focus on maintaining policy credibility, strengthening rupiah stability, and attracting foreign capital inflows back into the domestic financial market.
“Bank Indonesia’s policy journey from May to July focused primarily on stabilisation. The focus was on restoring policy credibility, maintaining rupiah stability, strengthening the external balance, and attracting capital inflows. In my view, that phase has largely been achieved,” Fakhrul said, as quoted on Wednesday (19/8).
Fakhrul considered one of the most interesting changes in the August Board of Governors Meeting to be the reduced emphasis on rupiah appreciation compared with previous months.
“I see Bank Indonesia beginning to feel more comfortable with the current exchange rate conditions, and starting to prepare to make use of the stability that has been established. If a few months ago Bank Indonesia’s communication focus was on how to attract capital inflows and strengthen rupiah stability, now I see the focus beginning to shift towards how the stability that has been established can provide greater benefits for the domestic economy,” he explained.
Fakhrul assessed that the change reflects an important transition in Indonesia’s monetary policy cycle.
“Previously the market was very focused on the price of money, namely the BI Rate, yields, and interest rate spreads. Now attention is beginning to shift to the flow of money. The question is no longer how high interest rates need to be to attract foreign capital, but how the liquidity that has been successfully accumulated can be transmitted back into the economy,” Fakhrul said.
According to Fakhrul, the success of a stabilisation phase is not measured only by the success in maintaining the rupiah or reducing financial market volatility.
The rupiah exchange rate strengthened against the US dollar on Wednesday (19/8/2026) after Bank Indonesia decided to hold the benchmark BI Rate at 5.75%. The rupiah was recorded at Rp17,855 per US dollar on Tuesday (18/8), strengthening 0.78%, which was attributed to Bank Indonesia’s stability policy. Bank Indonesia reported that digital transaction volume reached 5.50 billion in July 2026, growing 28.69% year-on-year, with QRIS recording the highest growth of 82.42%. The rupiah closed stronger at Rp17,840 after Bank Indonesia decided to hold the BI Rate at 5.75% at the August 2026 Board of Governors Meeting. Bank Indonesia recorded net foreign portfolio inflows of US$1.8 billion up to 14 August 2026, driven by government bonds and SRBI.