BI Rate Rises to 5.25 Percent, Rupiah in Focus

JAKARTA — Governor Perry Warjiyo of Bank Indonesia said the central bank’s monetary policy focus is currently on preserving exchange-rate stability and curbing inflation amid mounting global pressures from the Middle East conflict. At the Board of Governors Meeting held on 19-20 May 2026, BI decided to raise the BI Rate by 50 basis points to 5.25 percent. Accordingly, the Deposit Facility rate increased by 50 bps to 4.25 percent and the Lending Facility rate rose by 50 bps to 6.00 percent.

According to Perry, the decision aligns with BI’s policy stance that emphasises ‘pro-stability’ to strengthen Indonesia’s external resilience to global turmoil. In turn, macroprudential policy and the payment system will remain oriented to support economic growth or ‘pro-growth’.

‘Macroprudential loosening policy will continue to be strengthened to spur growth by increasing credit financing to the real sector while maintaining financial system stability,’ Perry said.

Bank Indonesia regards the global volatility triggered by the Middle East conflict as heightening pressures on world financial markets, including developing-nation currencies. Therefore, stabilising the rupiah has become a key policy focus. In implementation, BI will intensify foreign exchange interventions to bolster rupiah stability through Non-Deliverable Forward transactions (NDF) in overseas markets and through spot and Domestic Non-Deliverable Forward (DNDF) transactions in domestic markets.

According to Perry, the measure aims to keep domestic financial assets attractive to foreign portfolio investors. ‘Bank Indonesia will raise the structure of pro-market monetary instruments in line with the BI Rate increase to maintain foreign portfolio investment inflows into domestic financial assets,’ Perry said.

In addition to keeping domestic financial assets attractive, BI will also ensure adequate liquidity in the money and banking markets.