Bank Indonesia Suddenly Raises Interest Rate to 5.5 Per Cent, Perry Warjiyo Explains
Bank Indonesia (BI) has unexpectedly announced a decision to raise its benchmark interest rate (BI rate) by 25 basis points to 5.5 per cent. This decision was reached during the weekly Board of Governors Meeting on Tuesday (9/6/2026).
“The Board of Governors decided to raise the BI rate by 25 bps to 5.50 per cent, the Deposit Facility rate by 25 bps to 4.50 per cent, and the Lending Facility rate by 25 bps to 6.25 per cent,” stated BI Governor Perry Warjiyo in an official statement to journalists on Tuesday.
Perry explained that the increase in the BI rate is a follow-up measure to strengthen the stabilisation of the rupiah exchange rate against the impact of high global volatility resulting from the war in the Middle East. It also serves as a pre-emptive step to maintain inflation for 2026 and 2027 within the government’s target range of 2.5±1 per cent.
“This policy is also aimed at increasing yields to enhance the attractiveness of foreign portfolio investment inflows into Indonesia,” he added.
He explained that evaluations since the Board of Governors Meeting on 18–19 May 2026 showed the rupiah exchange rate performing weaker than expected. In addition to ongoing global volatility and high domestic demand for foreign exchange, the weakening was driven by outflows of foreign portfolio investment from Indonesia.
“In this regard, Bank Indonesia deems it necessary to take further steps to strengthen the stabilisation of the rupiah exchange rate by increasing yields and providing other incentives through monetary operations to encourage foreign investment inflows,” he said.
He noted that stabilising the rupiah exchange rate is also intended to ensure Indonesia’s external economic resilience and to ensure that inflation targets for 2026 and 2027 are met.
“In addition to raising the BI Rate to 5.5 per cent, Bank Indonesia is also implementing measures to strengthen rupiah exchange rate stabilisation to increase yields and provide other incentives for foreign investment inflows,” he continued.