Bank Indonesia Maintains Policy Rate Amid Global Risks, Closes Door to Rate Cuts
Jakarta — Bank Indonesia (BI) has decided to remove the possibility of lowering its benchmark policy rate from forward guidance in its March 2026 Board of Governors meeting, as escalating conflicts in the Middle East heighten global risks. Governor Perry Warjiyo announced that the central bank would no longer include the possibility of rate cuts in its policy statement.
“The impact of the Middle East conflict means we will no longer communicate the possibility of lowering the policy rate. We will maintain the BI Rate,” Perry said during a virtual press conference on Tuesday, 17 March 2026.
Perry explained that maintaining the BI Rate aims to preserve the stability of the rupiah’s exchange value through optimised intervention and adequate foreign exchange reserves. Indonesia’s foreign exchange reserves at the end of February 2026 stood at 151.9 billion US dollars, equivalent to 6.1 months of imports or 5.9 months of imports and government external debt payments — above the international adequacy standard of approximately three months of imports.
BI has also evaluated various scenarios regarding the Middle East conflict’s impact on the global economy. One key concern is volatility in global oil prices, which could affect global economic growth and inflation.
BI has revised its 2026 global economic growth projection downwards to 3.1 per cent from the previous estimate of 3.2 per cent. Global inflation is projected to rise from 3.8 per cent to 4.1 per cent.
These conditions are narrowing the scope for global monetary policy easing, including the potential delay in lowering the US Federal Funds Rate.
From a financial market perspective, BI has noted outflows of foreign capital from developing countries, including Indonesia. In March 2026, portfolio investment experienced net outflows of 1.1 billion US dollars.
The strengthening of the US dollar and rising yields on US government bonds are also placing pressure on exchange rates and domestic financial markets.
“We will continue to calibrate and optimise our policy response between exchange rate intervention, adequate foreign exchange reserves, and interest rate adjustments,” Perry stated.
BI is also strengthening foreign exchange transaction policies to protect rupiah stability and stem foreign capital outflows.
“We are strengthening foreign exchange transaction policies that will take effect from April to support the stability of the rupiah’s exchange value,” Perry said.
These measures include adjusting the limit on foreign exchange purchases against the rupiah from 100,000 US dollars to 50,000 US dollars per participant per month.
Additionally, BI is raising the limit on domestic non-deliverable forward (DNDF) transactions from 5 million US dollars to 10 million US dollars per transaction, and increasing the swap transaction limit from 5 million US dollars to 10 million US dollars.
BI is also adjusting foreign exchange traffic reporting requirements by lowering the threshold for supporting documentation on outbound fund transfers from 100,000 US dollars to 50,000 US dollars, effective from April 2026.
Perry emphasised that BI remains fully committed to maintaining the stability of the rupiah’s exchange value amid rising global uncertainty.