BI Rate Suddenly Raised to 5.5 Per Cent, Bank Indonesia Provides Explanation

The weekly Board of Governors Meeting of Bank Indonesia today decided to raise the BI-Rate by 25 bps to 5.50%, the Deposit Facility rate by 25 bps to 4.50%, and the Lending Facility rate by 25 bps to 6.25%.

Bank Indonesia Governor Perry Warjiyo explained that this increase is a follow-up measure to strengthen the stabilisation of the Rupiah exchange rate amidst high global volatility caused by the war in the Middle East. It also serves as a pre-emptive step to ensure that inflation for 2026 and 2027 remains within the government’s target range of 2.5±1%.

“This policy is also aimed at increasing yields to enhance the attractiveness of foreign portfolio investment inflows into Indonesia,” Perry stated in Jakarta on Tuesday, 9 June 2026.

In accordance with legislation and established practice, Bank Indonesia holds weekly Board of Governors Meetings every Tuesday to evaluate the implementation of the policy mix established during the Monthly Board of Governors Meetings. Following the evaluation from the Monthly Meeting held on 19-20 May 2026, the Rupiah exchange rate showed weaker development than previously anticipated.

He explained that, in addition to ongoing global volatility and high domestic demand for foreign exchange, the weakening was also driven by foreign portfolio investment outflows from Indonesia.

In this regard, Bank Indonesia deems it necessary to take further steps to strengthen the stabilisation of the Rupability exchange rate by increasing yields and providing other incentives to encourage foreign investment inflows. “The stabilisation of the Rupiah exchange rate is also intended to ensure that Indonesia’s external economic resilience is maintained and that the inflation targets for 2026 and 2027 are achieved,” he added.

Alongside the increase of the BI-Rate to 5.50%, Bank Indonesia is also implementing measures to strengthen Rupiah stabilisation by increasing yields and other monetary operation incentives for foreign investment inflows, as follows:

An increase in the interest rate structure of Bank Indonesia Rupiah Securities (SRBI) across all 6, 9, and 12-month tenors to further enhance yields for foreign portfolio investment inflows. The increase in the SRBI interest rate structure is conducted according to market mechanisms to ensure that portfolio investment in Indonesia remains competitive with other countries.