BI Rate Hiked to 5.5% as Bank Indonesia Reinforces Rupiah Stabilisation Amid Global Turmoil

Bank Indonesia (BI) raised the BI Rate by 25 basis points (bps) to 5.5 per cent during its Weekly Board of Governors Meeting on 9 June 2026. The central bank also lifted the Deposit Facility rate to 4.5 per cent and the Lending Facility rate to 6.25 per cent. According to an official BI press release, the move aims to strengthen rupiah exchange-rate stabilisation, keep inflation within target and increase the attractiveness of foreign portfolio investment. The decision was taken after BI assessed a sharper-than-expected rupiah weakening since the May 2026 meeting. BI stated that pressure on the rupiah was influenced by global turmoil stemming from the Middle East conflict, high domestic foreign-exchange demand, and the exit of some foreign portfolio investments from Indonesia’s financial markets. In addition to raising the BI Rate, BI adjusted the interest-rate structure for Bank Indonesia Rupiah Securities (SRBI) across all tenors of 6, 9 and 12 months. The central bank also reduced hedging swap costs for foreign investors by 10 per cent and reopened repo auctions for tenors of 3, 6, 9 and 12 months to ensure sufficient liquidity in the money and banking markets. The increase in the benchmark rate generally boosts the appeal of rupiah-based money-market instruments, including deposits and short-term securities, which constitute the main assets in money market mutual fund portfolios. Amid global market uncertainty, investors are considering not only asset growth potential but also portfolio liquidity. Money market mutual funds serve as an alternative for this purpose, as the majority invest in short-term instruments with relatively lower volatility compared to other capital-market instruments.