BI Governor Explains Why the Benchmark Rate Remains at 5.75%

BI Governor Explains Why the Benchmark Rate Remains at 5.75%

Reporter

September 28, 2026 | 09:31 pm

TEMPO.CO, Jakarta - Bank Indonesia (BI) Governor Destry Damayanti said an increase in the benchmark interest rate, known as the BI-Rate, would slow Indonesia’s economic growth. Based on BI’s assessment, every 25-basis-point increase in the rate would reduce economic growth by 0.1 percentage point.

“If the BI-Rate rises by 25 basis points, or 0.25 percentage point, economic growth will decline by 0.1 percentage point,” Destry said during a working meeting with House of Representatives Commission XI at the parliamentary complex in Jakarta on Monday, September 28, 2026.

She said this was one reason BI decided to keep the benchmark rate at 5.75 percent in September 2026.

Inflation Remains BI’s Policy Anchor

Destry, however, stressed that inflation remains the anchor of BI’s monetary policy.

She said Indonesia’s economy is currently operating below its potential level, leaving room for further growth without creating inflationary pressure.

BI previously raised its benchmark rate by a total of 100 basis points in May and June.

“We raised the rate by 100 basis points in May and June. So, if we rely solely on interest rate increases, our economic growth would inevitably decline significantly,” Destry said.

BI Uses Other Measures to Attract Foreign Capital

Destry said BI is also exploring other policy measures to attract foreign capital without raising interest rates.

One such measure is providing incentives to reduce hedging costs for foreign investors.

According to Destry, the policy has brought US$6 billion in foreign capital into Indonesia’s domestic financial markets since it was introduced a month ago.

Read: Bank Indonesia Reduces Spot Intervention to 30%

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