Not Just Today, BI Has Previously Raised Interest Rates Twice in a Month

Jakarta - Bank Indonesia (BI) surprisingly raised its benchmark interest rate by 25 bps to 5.50% on Tuesday (9/6/2026). BI today also lifted the Deposit Facility rate by 25 bps to 4.50%, and the Lending Facility rate by 25 bps to 6.25%. “This increase is a further step to strengthen the stabilisation of the Rupiah exchange rate from the impact of high global turmoil due to the war in the Middle East as well as a pre-emptive measure to keep inflation in check in 2026 and 2027,” according to BI’s statement. This policy is also aimed at enhancing yields to attract foreign portfolio investment inflows into Indonesia. Today’s BI rate hike comes just 20 days after the decision from the Board of Governors meeting on 20 May 2026. In May 2026, BI raised the interest rate by 50 bps to 5.25%. A rate hike of 50 bps is a relatively rare move by BI. Since the benchmark rate was introduced in 2005, BI has only raised rates in four distinct periods. Raising the BI rate twice in a month or within less than 30 days is not occurring for the first time today. Since the BI rate was introduced in July 2005, prior to today, BI had only raised the benchmark rate twice in a month or less than 30 days on two occasions, namely in 2013 and 2018. 1. August 2013 BI under Agus Martowardojo raised the interest rate twice, by 25 bps on 15 August and by 25 bps on 29 August. This aggressive tightening was triggered by fuel price adjustments and financial market turmoil during the taper tantrum era. This increase also came after the BI Rate had already risen by 50 bps in July. This aggressive round of hikes ended the low-interest-rate era introduced under Governor Darmin Nasution. Before the hike in June 2013, the BI rate had been held at 5.75% for 15 months. Agus Marto’s hawkish stance was not without basis. Low interest rates were not applicable for him amid the fast-paced dynamics of global and national economic changes. On 22 June 2013, the government raised the price of premium petrol by Rp2,000 per litre from Rp4,500 to Rp6,500, and the price of diesel by Rp1,000 per litre from Rp4,500 to Rp5,500. The BI rate was subsequently raised as a measure to anticipate a spike in inflation. BI acted pre-emptively by continuously raising the benchmark rate after the fuel price hike. “Although the short-term inflation rate is fairly under control, BI remains wary of inflationary pressures stemming from rising inflation expectations related to the fuel policy to be taken by the government,” BI wrote in the 2013 Indonesian Economic Report. Throughout June-December 2013, the central bank on Jalan MH Thamrin raised the benchmark rate by 175 bps, specifically by 25 bps in June, August, and November and by 50 bps in July. “The continuing uncertainty over the gradual reduction (tapering) of monetary stimulus by the Fed continued to put pressure on financial markets in various countries. Capital withdrawal and increased investment risk caused a decline in share prices, increased bond yields, and exchange rate depreciation in almost all emerging market countries, including Indonesia,” stated the results of the Board of Governors meeting at the time. 2. May 2018 BI Governor Perry Warjiyo aggressively raised the benchmark rate at the start of his term. Perry raised the benchmark rate by 25 bps on 30 May 2018 to 4.75% in an additional Board of Governors meeting. This meeting was held just days after he was inaugurated as BI Governor on 24 May 2018. On 17 May 2018, BI under Agus Martowardojo had already raised the rate by 25 bps to 4.50%. In May 2018, BI raised the benchmark rate aggressively as a pre-emptive and frontloading measure to anticipate the hawkish policy of the United States central bank, The Federal Reserve (The Fed). The Fed raised interest rates by 100 bps in 2018, including 25 bps each in March and June 2018.