BI Rate Suddenly Rises to 5.50%, Here is the Reason!
Bank Indonesia (BI) has raised its benchmark interest rate, the BI-Rate, by 25 basis points to 5.50% today, Tuesday (9/6/2026). This increase was decided during the Weekly Board of Governors (DG) meeting to evaluate the implementation of the policy mix established in the Monthly Board of Governors (RDG) meeting.
BI Governor Perry Warjiyo stated that this hike is a follow-up measure to strengthen the stabilisation of the Rupiah exchange rate against the impact of high global volatility resulting from the war in the Middle East. It also serves as a pre-emptive step to maintain inflation for 2026 and 2027 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,” he said.
In accordance with existing laws and practices, Perry noted that Bank Indonesia holds Weekly RDG meetings every Tuesday to evaluate the implementation of the policy mix set during the Monthly RDG. During the evaluation following the Monthly RDG on 19-20 May 2026, the Rupiah exchange rate showed weaker development than expected. 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, Perry emphasised that BI deems it necessary to take further steps to strengthen Rupiah exchange rate stabilisation by restoring 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,” said Perry.
Alongside the increase of the BI-Rate to 5.50%, Bank Indonesia is also implementing several measures to strengthen Rupiah stabilisation through increased 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 increase yields for foreign portfolio investment. This increase is conducted according to market mechanisms to ensure portfolio investment in Indonesia remains competitive with other countries.
The provision of incentives in the form of a 10% reduction in the hedging swap rate for foreign investors to further enhance attractiveness and compensate for obligations previously borne by investors. Bank Indonesia provides hedging swap facilities for foreign investment through Indonesian banks, which then pass them to Bank Indonesia. Meanwhile, regular swap rates continue to be provided by Bank Indonesia according to prevailing market mechanisms.
The reopening of the repurchase agreement (repo) auction window for 3, 6, 9, and 12-month tenors for the banking sector to ensure adequate liquidity in the money and banking markets, with the goal of maintaining double-digit growth in Primary Money (M0) (above 10%). The expansion of this repo facility will serve as the primary instrument in monetary liquidity management.
An increase in the intensity of both Rupiah and foreign exchange monetary operations to strengthen Rupiah stabilisation. The strengthening of Rupiah monetary operations will be achieved by increasing SRBI auctions to twice a week. Meanwhile, foreign exchange monetary operations will continue to be strengthened by increasing the intensity of interventions through spot transactions and DNDF in the domestic market, as well as NDF transactions in overseas markets.