Interest Rates Rise, BI Ensures Bank Liquidity Remains Ample

Jakarta – The rise in the policy rate to 5.25 per cent is certain not to tighten banking liquidity. Bank Indonesia (BI) emphasised that credit space for businesses and the public would be preserved through a loosening of liquidity policy.

Governor of BI Perry Warjiyo said the central bank intentionally prepared a number of instruments so that the BI Rate increase does not directly curb lending. One of them is through strengthening the Macroprudential Intermediation Ratio (RIM) and additional liquidity incentives for banks.

“Liquidity in the money market and banking is more than sufficient for banks to channel credit and minimise the impact of the rate increase,” Perry said at a media briefing following the BI Board of Governors Meeting (RDG) on Wednesday (20 May 2026).

BI expanded the coverage of the RIM, i.e., the ratio that governs banks’ ability to channel funds to the economy. Through the new rules, banks’ funding sources are not only counted from third-party funds such as current accounts, savings, and deposits, but also securities issued by banks.

In addition, BI added Macroprudential Liquidity Policy (KLM) incentives up to 0.5 per cent of third-party funds for banks that meet the RIM requirements but have not yet received the maximum incentive. The additional incentives will take effect on 1 August 2026.

Perry said the move is intended so that banks remain free to channel financing even as funding costs rise due to the policy rate increase. BI also asks banks to maintain efficiency so that lending rates do not rise sharply.

“Therefore we ask banks to increase efficiency so as not to raise lending rates,” Perry said.