BI Predicted to Raise Interest Rate to 6.5 Percent

ASEAN economist at United Overseas Bank (UOB) Enrico Tanuwidjaja predicts Bank Indonesia will raise its benchmark interest rate, or BI-Rate, to 6.5 percent this year. The reason is that the central bank still has room to raise interest rates to maintain rupiah stability. “So UOB’s prediction is three 25-basis-point increases to 6.5 percent, from the current 5.75 percent,” Enrico said during a media briefing in Jakarta on Thursday, 16 July 2026. He projects BI will raise the BI-Rate in July, August, and the fourth quarter of 2026. Enrico believes BI’s move to raise the benchmark rate to 5.75 percent was appropriate, as foreign capital has begun flowing back into Indonesia. UOB noted that foreign capital inflows into the bond market reached US$470 million year-to-date as of 8 July 2026, while the stock market still recorded outflows of US$4.39 billion year-to-date. The projection for a BI-Rate hike is in line with expectations of further interest rate increases by the US Federal Reserve. Enrico said that if the Fed raises rates, the BI-Rate must be increased again. He also assessed that a BI-Rate hike would not necessarily hinder economic growth, as liquidity is currently in a safe condition. He noted that the ratio of liquid assets to third-party funds (AL/DPK) remains around 25 percent. With sufficient liquidity, Enrico advised banks to channel funds into sectors with high multiplier effects. “We really need funds to flow into manufacturing, food and beverage, and accommodation; these sectors still need it. Especially MSMEs,” he said. During May and June this year, BI had already raised the benchmark rate three times to reach 5.75 percent. The latest increase was decided at the June Board of Governors meeting. BI Governor Perry Warjiyo stated that the rate hike was a further step to strengthen rupiah exchange rate stability amid high global uncertainty.