BI Governor: Room to Lower Interest Rates Becoming Increasingly Limited

Bank Indonesia Governor Perry Warjiyo stated that the room for cutting the policy rate or BI-Rate in the future will become increasingly limited. According to him, the conflict in the Middle East is impacting the strengthening of the US dollar index and the outflow of foreign capital from the domestic financial markets.

Perry mentioned that BI needs to recalibrate various policies towards stability. “Although we maintain the BI-Rate at 4.75 percent, it seems that the room for its reduction in the future may become increasingly limited over time, and we must also address it for stability,” said Perry during a working meeting with Commission XI of the House of Representatives in Jakarta on Wednesday, 8 April 2026.

BI has also increased auctions of Bank Indonesia Rupiah Securities (SRBI) since the beginning of this year. This step reverses the strategy in 2025 when BI reduced the circulation of SRBI to support liquidity expansion. According to Perry, this strategy of increasing SRBI aims to attract capital into the domestic market while maintaining exchange rate stability.

Another policy is the purchase of Government Securities (SBN) in the secondary market. “This year, year-to-date, we have already purchased Rp90.05 trillion. That is what we have done,” said Perry.

Throughout 2025, BI lowered the policy rate five times by 125 bps to 4.75 percent. This position is the lowest since 2022.

In the Board of Governors’ Meeting in March 2026, BI decided to hold the policy rate at 4.75 percent. BI also decided to maintain the deposit facility rate at 3.75 percent and the lending facility rate at 5.50 percent.