Rupiah Stabilisation: Bank Indonesia Raises Benchmark Interest Rate to 5.5 Per Cent
Bank Indonesia, during its weekly Board of Governors Meeting on Tuesday, raised its benchmark interest rate (BI-Rate) by 25 basis points to 5.50 per cent to bolster the stabilisation of the rupiah exchange rate and ensure inflation remains under control.
BI Governor Perry Warjiyo, in a statement confirmed in Jakarta on Tuesday, stated that the interest rate hike is also intended to increase yields to enhance the attractiveness of foreign portfolio investment inflows into Indonesia.
In an evaluation since the Monthly Board of Governors Meeting held on 19-20 May 2026, Perry noted that the rupiah exchange rate has shown weaker development than anticipated. He stated that, alongside ongoing global volatility and high domestic demand for foreign exchange, the weakening of the rupiah has also been driven by outflows of foreign portfolio investment from Indonesia.
“In this regard, Bank Indonesia deems it necessary to take further steps to strengthen the stabilisation of the rupiah exchange rate by increasing yields and providing other incentives to encourage the inflow of foreign investment,” he said.
Perry added that the stabilisation of the rupiah exchange rate is also intended to ensure that Indonesia’s external economic resilience is maintained and that inflation targets for 2026 and 2027 are achieved.
In line with the increase in the benchmark interest rate, BI also set the Deposit Facility rate at 4.50 per cent and the Lending Facility rate at 6.25 per cent.
In accordance with legislation and established practice, Bank Indonesia holds weekly Board of Governors Meetings every Tuesday to evaluate the implementation of the policy mix established during the Monthly Board of Governors Meetings.
The rupiah exchange rate opened at Rp18,134 per US dollar on Tuesday morning. On Monday afternoon, the rupiah exchange rate showed a decline of 152 points, or 0.84 per cent, to Rp18,188 per US dollar from the previous rate of Rp18,036 per US dollar.