BI Rate Rises to 5.25 Per Cent to Strengthen the Rupiah

Bank Indonesia (BI) raised its policy rate (BI rate) by 50 basis points to 5.25 per cent at the BI Board of Governors meeting for May 2026. Consequently, the deposit facility rate rose by 50 basis points to 4.25 per cent, and the lending facility rate also rose by 50 basis points to 6 per cent. BI Governor Perry Warjiyo said the rate increase was aimed at stabilising the rupiah, which has weakened amid heightened global volatility arising from the conflict in the Middle East. The increase is also intended to keep inflation in 2026 and 2027 within BI’s target range of 1.5-3.5 per cent. Warjiyo added that the decision aligns with a monetary policy focus on stabilisation that reinforces the resilience of the national external sector against the effects of global turmoil. Meanwhile, macroprudential and payments system policies will continue to be directed to support growth. The payments system policy will also aim to support digital economy activity and inclusive finance through expanding acceptance of digital payments, strengthening the structure of the payments system industry, and improving the reliability and resilience of payments infrastructure. The direction of the policy mix among monetary, macroprudential, and the payments system to strengthen stability and to promote sustainable economic growth is also supported by other policy measures, he said.