Economist Consensus Projects BI to Hold Benchmark Rate, Here's Why

Jakarta – A consensus of economists projects that Bank Indonesia (BI) will hold its benchmark interest rate (BI-Rate) at 5.5 percent during the monthly Board of Governors Meeting (RDG) in June. The tightening policy was previously implemented consistently. BI has also used additional measures to attract capital inflows, including raising the yield on Bank Indonesia Rupiah Securities (SRBI) instruments. Riefky assessed that this policy has helped stabilise financial markets. “In our view, this reflects a fairly significant monetary tightening and we expect Bank Indonesia to maintain the policy rate at the June meeting,” said Teuku Riefky, Macroeconomics and Financial Markets Economist at LPEM FEB UI, in a publication in Jakarta on Thursday, 18 June 2026. As is known, during the RDG on 19-20 May 2026, Bank Indonesia raised the BI-Rate by 50 basis points (bps). However, the rupiah exchange rate continued to weaken, touching the level of Rp18,000 per US dollar, prompting BI to raise the BI-Rate again by 25 bps through a Weekly RDG on 9 June 2026, outside the regular schedule. Thus, the cumulative increase reached 75 bps in a short period. The rupiah strengthened to around Rp17,700 per US dollar on 12 June. However, the government bond market and the stock market still recorded net outflows of 0.18 billion US dollars and 0.19 billion US dollars respectively during the 9-12 June period. In the bond market, the yield curve temporarily returned to a more normal shape after the rate hike, with the 10-year government bond yield moving back above the 1-year tenor on 9 June. “The recovery in both markets, reflected by the rebound in the Jakarta Composite Index (IHSG) and the temporary normalisation of the yield curve, appears to have been driven mainly by domestic investors,” noted Riefky. In the stock market, he explained, state-owned banks conducted share buybacks, while domestic investors also stepped in to accumulate shares after the IHSG corrected. Meanwhile, in the bond market, foreign investor outflows from government bonds were partly offset by inflows into SRBI instruments as yields rose, which also helped contain further rupiah depreciation pressure.