Why Economists Predict BI Will Hold Key Interest Rate at 4.75 Percent
Several economists predict that the April 2026 Bank Indonesia Board of Governors Meeting will maintain the BI Rate at 4.75 percent. This is in line with ongoing external pressures and increasing inflation risks if global energy prices continue to rise.
“The room for rate cuts has run out due to higher inflation expectations,” said Chief Economist of Bank Mandiri Andry Asmoro when contacted in Jakarta on Wednesday, 22 April 2026, as quoted from Antara.
Andry estimates that the rupiah exchange rate in the short term, around one to three months ahead, will still face pressure, tending to move in the Rp17,000 range per US dollar.
Meanwhile, Department Head of Macroeconomic and Financial Market Research at Permata Bank Faisal Rachman opines that the room for lowering the BI Rate in the future will become even smaller. This is because geopolitical turmoil is unlikely to end quickly.
At present, said Faisal, sentiment towards the rupiah is beginning to show improvement. However, there is a seasonal pattern in the second quarter involving payments of returns on domestic assets to non-resident investors, which still exerts pressure on the rupiah.
He estimates that the rupiah exchange rate still has the opportunity to strengthen in the second semester. In particular, according to Faisal, because it is currently at a relatively undervalued level.
Faisal mentioned that strengthening below Rp17,000 per US dollar is still possible. The condition: economic growth remains resilient, inflation is controlled, and fiscal sustainability remains strong, especially through improvements in state revenue.
“If all these things can be realised, then it could become a positive catalyst for Indonesia,” said Faisal. “Even if below Rp17,000 per US dollar, but still in the Rp16,800-16,900 per US dollar range.”
Meanwhile, economist from the Institute for Economic and Social Research at the Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) Teuku Riefky explained from the price side that general inflation has declined to 3.48 percent (year-on-year) in March 2026. “This is in line with the diminishing low-base effect from previous electricity tariff discounts,” he said.
But the decline in inflation was then followed by increasing global uncertainty, especially after the escalation of the US-Iran conflict. As a result, imported inflation risks rising through increases in energy prices and triggering volatility in global financial markets.
Riefky also warned that external shocks will influence the direction of the US central bank’s policy (The Federal Reserve). Even if The Fed holds rates, the March Federal Open Market Committee (FOMC) meeting showed differing views, with some assessing inflation risks as still high, thus opening room for rate hikes, while others are beginning to consider rate cuts in line with economic slowdown risks.
He stated that the combination of inflation pressures and slowing growth increases stagflation risks, making The Fed’s policy room narrower. “And pushing a wait-and-see approach while monitoring conflict developments ahead,” said Riefky.
Indonesia’s financial markets, he said, experienced net capital outflows of around US$1.47 billion from mid-March 2026 to mid-April 2026, with varying trends across asset classes.
In line with the capital outflows over the past month, the rupiah exchange rate experienced moderate depreciation pressure with a weakening of 0.88 percent (month-to-month) from Rp16,975 per US dollar to Rp17,125 per US dollar in the period from mid-March to mid-April. “This passed the psychological threshold of Rp17,000 per US dollar,” he said.
On the other hand, Bank Indonesia (BI) continues to intervene. This is reflected in the decline in foreign exchange reserves by around US$3.7 billion from US$151.9 billion in February 2026 to US$148.2 billion at the end of March 2026.
Furthermore, Riefky assesses that premature monetary easing risks triggering capital outflows and weakening the rupiah amid still-high inflation, while a cautious stance could tighten financial conditions and pressure domestic economic activity.
Therefore, Riefky predicts that BI will hold the BI Rate at 4.75 percent while remaining in a wait-and-see position. The central bank is also expected to prioritise exchange rate stability and external resilience, with room to tighten policy if inflation pressures re-emerge or increase.