BI Raises BI-Rate by 25 bps to 5.50%

The Bank Indonesia Weekly Board of Governors Meeting on 9 June 2026 decided to raise the BI-Rate by 25 basis points to 5.50%, the Deposit Facility rate by 25 bps to 4.50%, and the Lending Facility rate by 25 bps to 6.25%. According to a BI press release, this increase is a further step to strengthen rupiah exchange rate stabilisation from the impact of high global turmoil due to the war in the Middle East, as well as a pre-emptive measure to keep inflation in 2026 and 2027 within the 2.5% target range set by the Government. This policy is also aimed at increasing yields to attract foreign portfolio investment inflows into Indonesia. In accordance with prevailing law and practice, Bank Indonesia holds a Weekly Board of Governors Meeting every Tuesday to evaluate the implementation of the policy mix set in the Monthly Meeting. In the evaluation since the Monthly Meeting on 19-20 May 2026, the rupiah exchange rate showed weaker-than-expected developments. Besides being caused by ongoing global turmoil and high domestic foreign exchange demand, the weakening was also driven by foreign portfolio investment outflows from Indonesia. In connection with this, Bank Indonesia deemed it necessary to take further steps to strengthen rupiah exchange rate stabilisation by again increasing yields and a number of other incentives to encourage foreign investment inflows. The rupiah exchange rate stabilisation is also pursued so that Indonesia’s external economic resilience is maintained and the inflation targets for 2026 and 2027 remain achievable.