Economist: BI Rate Hike Can Maintain Credit Growth

The decision by Bank Indonesia (BI) to raise its benchmark interest rate, or BI Rate, to 5.5 percent is not considered to automatically hamper banking credit growth. The policy is instead expected to strengthen rupiah exchange rate stability and maintain the confidence of economic actors. CIMB Niaga economist Mika Martumpal said the BI Rate hike, coupled with an increase in the yield on Bank Indonesia Rupiah Securities (SRBI), will help maintain domestic financial market stability. “This benchmark interest rate hike policy, combined with the increase in SRBI interest rates, will help stabilise the rupiah and strengthen the confidence of investors, business actors, and the public in the domestic economy,” Mika told Republika on Tuesday (9/6/2026). According to him, BI’s move does not solely focus on exchange rate stabilisation. The central bank is also endeavouring to ensure financial system liquidity remains adequate by reopening repurchase agreement (repo) facilities for banks. In addition to raising the BI Rate by 25 basis points (bps) to 5.5 percent, BI reopened the repo auction window for three, six, nine, and 12-month tenors to maintain liquidity adequacy in the money market and banking sector. Mika assesses that this policy combination is important for maintaining a balance between exchange rate stability and economic financing needs. With liquidity maintained, banks still have room to disburse credit even though the cost of funds has the potential to increase along with the interest rate hike. “BI is also ensuring financial system liquidity is maintained through repo instruments. Rupiah stability and sufficient liquidity will keep credit growth high even though the cost of funds rises,” said Mika. Previously, BI, through its weekly Board of Governors Meeting (RDG), decided to raise the BI Rate to 5.5 percent. BI Governor Perry Warjiyo said the policy was pursued to strengthen rupiah stabilisation amidst global turmoil and to encourage foreign portfolio investment inflows into Indonesia. Besides raising the benchmark rate, BI also increased SRBI yields, provided incentives for foreign investors, strengthened monetary operations, and reopened repo facilities to maintain financial system liquidity.