Economist: BI-Rate Hike Shows Rupiah Still Under Pressure
Economists from Bank BTN believe that the decision to raise the BI-Rate on Thursday demonstrates Bank Indonesia’s caution regarding ongoing risks of pressure on the rupiah exchange rate and the potential subsequent impact of imported inflation.
The benchmark interest rate (BI-Rate) has increased by 25 basis points following the Bank Indonesia Monthly Board of Governors Meeting for the June 2026 period. With this latest increase, the BI-Rate now stands at 5.75 per cent.
“We view this decision as reflecting Bank Indonesia’s focus on prioritising macroeconomic stability, particularly in maintaining the stability of the rupiah exchange rate amidst high global uncertainty,” said BTN Chief Economist Myrdal Gunarto in a publication in Jakarta on Thursday.
On the other hand, the BTN economist team noted that the policy also reflects the Indonesian central bank’s response to both domestic and external liquidity dynamics.
“The risk of a widening current account deficit, increasing foreign exchange needs for energy imports and corporate dividend payments, as well as global capital flow dynamics, are factors that also influence the current direction of monetary policy,” Mydearl explained.
The BTN economist team also views this move as part of Bank Indonesia’s anticipatory strategy to maintain the attractiveness of domestic financial assets amidst potential shifts in global monetary policy and international capital flow dynamics.
Although foreign investor interest in the Indonesian financial market is beginning to show signs of improvement, Bank Indonesia continues to take preventive measures to strengthen market confidence and maintain financial system stability.
High investor interest in the Bank Indonesia Rupiah Securities (SRBI) auctions, with absorption reaching approximately Rp43 trillion and yields remaining above 7 per cent, indicates that Bank Indonesia’s monetary instruments remain effective in supporting domestic financial market stability.
This condition simultaneously provides space for Bank Indonesia to continue maintaining liquidity and exchange rate stability should global volatility increase again.
In the short term, the BTN economist team expects short-term Government Securities (SBN) yields to remain above 7 per cent, while 10-year Treasury bond (SUN) yields are expected to move within the 6.87–7.41 per cent range.
Myrdal projects that moving forward, the room for BI-Rate adjustments will become increasingly limited and will depend heavily on developments in the rupiah exchange rate, domestic inflation, global energy prices, and international capital flow dynamics.
“As long as external pressures begin to subside and global oil prices remain controlled, we expect the BI-Rate could potentially be maintained at the 5.75 per cent level until the end of the year,” he said.
Under these assumptions, Indonesia’s economic prospects are expected to remain stable, with economic growth at approximately 5.17 per cent in 2026 and inflation at 3.09 per cent.
Meanwhile, banking intermediation growth is expected to proceed more moderately, with credit growth remaining below 9 per cent.
According to the BTN economist team, the sectors projected to be the main drivers of financing growth include food security, transportation, construction, the food and beverage industry, energy, iron and steel, palm oil, and residential property.
Notably, within one month, the cumulative increase in the BI-Rate has reached 100 bps.
During the Board of Governors Meeting on 19-20 May 2026, the BI-Rate rose by 50 basis points (bps), marking the first adjustment after being held at 4.75 per cent since September 2025.
However, the rupiah exchange rate continued to weaken, touching the Rp18,000 level per US dollar, prompting Bank Indonesia to raise the BI-Rate by another 25 bps through a Weekly Board of Governors Meeting on 9 June 2026, outside the regular schedule.
Most recently, on Thursday (18/6), through the Monthly Board of Governors Meeting, the central bank decided to raise the BI-Rate by 25 bps.