BI Governor: Room for Cutting Key Interest Rate Increasingly Limited

Jakarta, CNBC Indonesia - Bank Indonesia Governor Perry Warjiyo has candidly revealed that the room for lowering the BI Rate in the future is increasingly limited. He made this statement because the war in the Middle East between the United States (US) and Israel with Iran has had a tangible impact on economic turbulence and global financial markets. “Regarding interest rates, although we maintain the BI Rate at 4.75%, it seems that in the future the room is becoming more and more closed,” Perry said during a working meeting with Commission XI of the DPR in Jakarta on Wednesday (8/4/2026). Perry stated that the impact of the war is evident from the rising yields on US government securities, namely US Treasuries for 2-year and 10-year tenors. This is particularly due to the increasing pressure on the US government’s fiscal deficit, as the Middle East conflict has driven up world oil prices and led to greater outflows of foreign capital from developing countries. “And how the strengthening of the US dollar is evident there, and this is why from BI’s side we need to calibrate the various policies we implement,” Perry said.