Bank Indonesia holds BI-Rate at 5.75%, confirming economists’ expectations following the central bank’s Board of Governors Meeting (RDG) held on July 21–22, 2026. The Deposit Facility rate also remained unchanged at 4.75%, along with the Lending Facility rate at 6.5%.
“The Bank Indonesia Board of Governors Meeting on July 21 and 22, 2026 decided to hold the BI-Rate at 5.75%,” said BI Governor Perry Warjiyo during a virtual press conference following the meeting on Wednesday, July 22, 2026.
Why Bank Indonesia Holds BI-Rate Steady This Month
Ahead of the meeting, economists from the Institute for Economic and Social Research at the University of Indonesia’s Faculty of Economics and Business (LPEM FEB UI) had already projected this outcome. LPEM FEB UI economist Teuku Riefky said inflation is expected to remain within Bank Indonesia’s target range of 2.5% ± 1%, even as upside risks grow following renewed geopolitical tensions in the Middle East that could push global energy prices higher and contribute to imported inflation. However, this inflationary pressure is largely supply-driven and therefore unlikely to be effectively addressed through additional monetary tightening alone.
“We expect Bank Indonesia to hold the BI-Rate at the upcoming Board of Governors Meeting while evaluating the impact of recent policy tightening on the exchange rate, inflation, and domestic economic activity,” Riefky said in the July 2026 RDG Macroeconomic Analysis Series report received on Wednesday, July 22, 2026.
The Case Behind Why Bank Indonesia Holds BI-Rate After Three Hikes
BI had raised its benchmark interest rate by a total of 100 basis points between May and June 2026. This step was taken to strengthen rupiah stability and boost the appeal of rupiah-denominated financial assets amid rising global uncertainty.
The rate hikes began in May 2026 with a 50 basis point increase, from 4.75% to 5.25%. Then, at the weekly RDG held on June 9, 2026, the BI-Rate rose another 25 basis points to 5.5%. Finally, at the June 2026 monthly RDG, BI decided to raise the benchmark rate by a further 25 basis points to reach 5.75%.
Despite these hikes, the rupiah continued to weaken even with higher interest rates and foreign exchange intervention in place, suggesting that monetary measures may have helped contain volatility but have not yet reversed the underlying pressure. Dollar demand from global investors, corporate foreign currency needs, and concerns over fiscal commitments and financing needs have partly offset the benefits of a wider interest rate differential.
“Therefore, further monetary tightening may only provide limited additional support for the rupiah, while imposing greater costs on domestic credit, investment, and economic activity,” Riefky said.
Additional Policy Measures Beyond the Rate Decision
Governor Perry Warjiyo explained that Bank Indonesia is expanding incentive policies and a range of other measures to boost foreign portfolio investment inflows and strengthen rupiah exchange rate stability, accelerate money market and foreign exchange market deepening, improve liquidity, and address liquidity segmentation in the money market and banking sector.
“The BI-Rate decision and these other policies are an integrated part of Bank Indonesia’s policy mix, which remains consistent in further strengthening rupiah exchange rate stability amid continued high global uncertainty, while also maintaining inflation within target for 2026 and 2027,” Perry added.
Economists Say Bank Indonesia Holds BI-Rate But Stays Ready to Act
The decision aligned with expectations from several economists. Bank Permata Chief Economist Josua Pardede said that while BI would hold its benchmark rate, its communication tone remained firm, with the central bank ready to raise the BI-Rate again if pressure on the rupiah resumes.
Josua believes BI should avoid rushing into further rate hikes, but should instead maintain credibility through firm communication, measured intervention, and close coordination with the government. The most recent hike at the June RDG was also explicitly aimed at strengthening rupiah stabilization amid global uncertainty and keeping 2026–2027 inflation within the 2.5% ± 1% target range.
“The government needs to provide support on the fiscal, export, food, and energy fronts, along with policy certainty, so the burden of defending the rupiah doesn’t continue to rest solely on BI’s interest rate,” Josua explained.
What This Means for the Fed and Global Rate Outlook
Meanwhile, the US Federal Reserve is expected to keep its benchmark rate (Fed Funds Rate) unchanged at the Federal Open Market Committee (FOMC) meeting on July 28–29, 2026, as policymakers likely seek further evidence that inflation is moving sustainably toward the 2% target before considering any policy rate adjustment.
At the same time, renewed tensions between Iran and the US following the collapse of a ceasefire have raised the risk of resurgent energy price pressure through potential disruptions to oil shipments via the Strait of Hormuz.
“These developments could complicate the disinflation process and push the Fed toward a more cautious policy stance,” Riefky noted.
What This Means for Currency Exchange Planning
With Bank Indonesia holds BI-Rate at 5.75% for now, the rupiah’s near-term trajectory will likely continue to hinge on external factors, including Fed policy signals and developments in the Middle East, rather than further domestic rate action alone. For individuals and businesses planning currency transactions, this suggests exchange rate volatility could persist even without additional BI rate hikes in the immediate term.
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Source: Investor Daily
