Video: BI Interest Rates Forecast to Fall 50 Basis Points by End of 2026, Not Today

Jakarta — Rising global crude oil prices reflect market concerns over the risk of Middle Eastern conflict involving Iran versus the United States and Israel, according to Ronny Setiawan, Executive Director and Head of Trading Global Finance Markets at Bank DBS Indonesia.

With crude oil prices remaining above USD 80 per barrel, the market views the Middle East conflict as far from resolved. For Indonesia, these conditions could pressure the state budget (APBN), trigger Rupiah depreciation, widen fiscal deficits, and slow economic growth.

These geopolitical developments will influence central bank interest rate policies, including those of the Federal Reserve and Bank Indonesia. Both institutions are forecast to maintain their benchmark interest rates in March 2026 but may cut the BI Rate by 50 basis points by the end of 2026.