BI Rate Could Rise, Credit and Instalments May Face Pressure
Pressure on the rupiah exchange rate and rising global risks are beginning to pose new challenges for the banking sector. Permata Bank forecasts that the possibility of an increase in Bank Indonesia’s benchmark interest rate, or BI Rate, remains open in the first half of 2026.
Head of Macroeconomic & Financial Market Research at Permata Bank, Faisal Rachman, stated that the rupiah’s weakening, which has breached more than 4% year-to-date, is one of the factors heightening the chances of a BI Rate hike.
“We see a 25 basis point interest rate increase in the first half as quite possible, likely in May or June, bringing the BI Rate to 5%,” said Faisal during the Virtual Media Briefing for the PIER Economic Review of the First Quarter 2026, on Tuesday (12/5/2026).
According to him, the current pressure on the rupiah is influenced by a combination of global and domestic factors, ranging from Middle East conflicts and high global oil prices to foreign capital outflows from the domestic financial markets.
Permata assesses that the eventual BI Rate increase could impact the banking sector, particularly public and business credit demand.
Chief Economist at Permata Bank, Josua Pardede, said that current credit demand is actually still relatively weak, although banking liquidity is generally adequate.
“One of the main drivers of current credit growth is investment credit. Meanwhile, working capital credit, corporate credit, commercial, and consumer credit remain relatively limited,” Josua stated.
According to him, the slowdown is starting to show in consumer credit amid pressure on middle-class purchasing power. The downtrading phenomenon is causing people to hold back on purchases of durable goods like new vehicles.
Josua said that economic activity remains the primary factor determining banking credit growth.
“If economic activity improves, public consumption is solid, and working capital demand increases, then credit demand will automatically rise,” he said.