Bank Indonesia Holds Benchmark Interest Rate at 4.75% Amid Rupiah Stability Concerns

Bank Indonesia Maintains Key Interest Rate

Bank Indonesia (BI) announced today its decision to hold the benchmark BI-Rate steady at 4.75 percent. This marks the fourth consecutive meeting where the central bank has maintained the rate at this level, following its Board of Governors Meeting (RDG) held on January 20-21, 2026. The decision aligns with market expectations and underscores BI's commitment to monetary stability in Indonesia.

In addition to the BI-Rate, the central bank also kept the Deposit Facility rate at 3.75 percent and the Lending Facility rate at 5.50 percent.

Focus on Rupiah Stability and Inflation Control

A primary driver for maintaining the interest rate is the central bank's focus on stabilizing and strengthening the rupiah exchange rate. The rupiah has experienced renewed downward pressure, weakening by 1.53 percent as of January 20, 2026, compared to the end of December 2025. Bank Indonesia Governor Perry Warjiyo emphasized that the current policy focus is on 'stabilizing and strengthening the rupiah' amidst global uncertainties.

The decision also aims to support the achievement of an inflation target of 2.5 percent ± 1 percent for both 2026 and 2027. Recent data showed headline inflation at 2.9 percent year-on-year in December, with core inflation at 2.4 percent year-on-year, both within BI's target range.

Economic Growth and Future Outlook

While prioritizing stability, Bank Indonesia also seeks to encourage and support economic growth. The central bank maintained its GDP growth forecasts, projecting 4.7 percent–5.5 percent for 2025 and 4.9 percent–5.7 percent for 2026.

BI has indicated that it remains open to further rate cuts, provided that inflation remains under control. The central bank will continue to assess the room for future BI-Rate reductions. To further stabilize the rupiah, BI plans to intensify its market interventions, including through spot transactions, non-deliverable forwards, and measured purchases of government bonds in the secondary market.