Trimegah Economist Assesses BI Rate Needs to Rise by 25 Basis Points

Bank Indonesia (BI) is currently holding its monthly Board of Governors Meeting (RDG) on 20 and 21 July 2026. Trimegah Sekuritas Indonesia Chief Economist Fakhrul Fulvian believes the central bank still needs to raise its benchmark interest rate, the BI Rate, at this meeting. According to Fakhrul, market developments have been positive over the past week. However, Indonesia’s need to attract foreign capital inflows this year remains very large. “We believe Bank Indonesia still needs to continue raising interest rates by 25 basis points at the July RDG,” he said in a written statement on Monday, 20 July 2026. He stated that this choice is not solely based on current market conditions, but also because BI had previously conveyed a pre-emptive approach. The central bank’s credibility is built when such communication is followed by policy implementation. Over the past week, the Jakarta Composite Index (IHSG) has been one of the best-performing stock markets in the region. Meanwhile, the rupiah also recorded a relatively better strengthening compared to most regional currencies. On Monday morning, the rupiah exchange rate was recorded at 17,977 per US dollar, improving from the previous week’s level of 18,000 per US dollar. The IHSG opened the week up 21.95 points at 6,197. According to Fakhrul, the improved sentiment was supported by increased investor confidence in Indonesia’s economic prospects, particularly after rating agency S&P Global maintained the country’s sovereign debt rating at investment grade BBB with a stable outlook. However, he assessed that short-term market stabilisation should not be interpreted as meaning all external challenges have been resolved. The market has shown significant improvement, but Indonesia’s need to attract foreign capital inflows this year remains very large. “Therefore, this positive momentum must be strengthened through consistent and credible policies,” he said. Furthermore, Fakhrul estimates that Indonesia still requires additional capital inflows of around US$11 billion by the end of the year to maintain the balance of payments and strengthen rupiah stability. In this context, he believes BI needs to maintain the attractiveness of domestic financial assets through consistent policy measures. The BI Rate has been maintained at 4.75 percent since September 2025. On 20 May, the central bank raised the benchmark rate by 50 basis points to 5.25 percent. The BI Rate was then raised again suddenly on 9 June, outside the regular Board of Governors meeting schedule, to 5.50 percent. During the RDG on Thursday, 18 June 2026, the central bank decided to hike the benchmark rate by another 25 basis points to 5.75 percent. Cumulatively, from May to June, the BI Rate has increased by 100 basis points.