Energy Prices Rise Due to War, BI Assures Stability Is Maintained

The Bank Indonesia Board of Governors’ meeting in June 2026 decided to raise the benchmark interest rate by 2ability 25 basis points. This policy means the BI Rate has increased by a total of 100 basis points since May 2026, reaching 5.75%.

Senior Deputy Governor of Bank Indonesia, Destry Damayanti, stated that the interest rate policy is part of the central bank’s mandate to maintain the stability of Indonesia’s financial system. Amidst significant global pressures, BI is prioritising stability while ensuring measures are in place to encourage growth.

The 100 basis point increase in the BI Rate, which serves as BI’s monetary instrument for maintaining stability, is accompanied by the implementation of macroprudential policies. This includes providing incentives to banks willing to extend credit to priority sectors, which has already reached Rp 420 trillion.

In the payment system, BI is providing transaction relief for MSMEs and working towards deepening financial markets, steps which are expected to help maintain the stability of the Rupiah exchange rate.

Amidst global uncertainty driving the strengthening of the US Dollar Index and putting pressure on major global currencies, including the Rupiah, the increase in the BI Rate is expected to enhance the attractiveness of Rupiah-denominated instruments for foreign investors. As of June 2026, net inflows into SBN (Government Securities) and SRBI (Bank Indonesia Rupiah Securities) have exceeded Rp 103 trillion.

BI also highlighted geopolitical developments in the Middle East, which have impacted energy prices, potentially leading to increases in non-subsidised fuel prices that could drive up inflation. Conversely, the rise in prices for other commodities, such as coal, presents an opportunity to increase the nation’s foreign exchange reserves.