Bank Indonesia Tightens Monetary Policy, Lifts BI-Rate to 5.75%

JAKARTA, Jakartaweekly.com — Bank Indonesia has tightened monetary policy once again by raising its benchmark interest rate, known as the BI-Rate, by 25 basis points (bps) to 5.75%.

The central bank also increased the Deposit Facility rate by 25 bps to 4.75% and the Lending Facility rate by 25 bps to 6.50%.

Ramdan Denny Prakoso, Executive Director of Bank Indonesia’s Communications Department, said in a statement published on the central bank’s website that the rate hike is a follow-up measure aimed at strengthening rupiah stabilization.

“This decision was taken amid persistently high global uncertainty,” he said in Jakarta on Thursday, June 18, 2026.

The policy is also intended as a pre-emptive step to keep inflation in 2026 and 2027 within the government’s target range of 2.5% ±1%.

Despite raising interest rates, Ramdan said macroprudential and payment system policies will continue to be directed toward supporting economic growth.

He said accommodative macroprudential policies will be further strengthened to encourage economic growth through increased lending and financing to the real sector while maintaining financial system stability.

Meanwhile, payment system policies will focus on expanding digital payment acceptance, strengthening the payment system industry structure, and enhancing the reliability and resilience of payment infrastructure.

The monetary, macroprudential, and payment system policy mix aimed at strengthening stability while supporting sustainable economic growth will be backed by several policy measures.

The first measure is to enhance the effectiveness of monetary policy implementation to stabilize the rupiah exchange rate and maintain inflation within the 2026–2027 target range of 2.5% ±1%.

Bank Indonesia will intensify foreign exchange market intervention to support rupiah stability through Non-Deliverable Forward (NDF) transactions in offshore markets, as well as spot and Domestic Non-Deliverable Forward (DNDF) transactions in the domestic market.

The central bank will also maintain the interest rate structure of Bank Indonesia Rupiah Securities (SRBI) across the 6-, 9-, and 12-month tenors in line with the BI-Rate increase to keep domestic financial assets attractive to foreign portfolio investors.

In addition, Bank Indonesia will continue providing a 10% reduction incentive on hedging swap rates for foreign investors. The measure is intended to further enhance Indonesia’s attractiveness to foreign capital inflows while compensating investors for existing obligations.

The central bank will also maintain adequate liquidity in the money market and banking sector by ensuring primary money growth remains above 10%, in line with monetary expansion. This includes reopening the repurchase agreement (repo) auction window for 3-, 6-, 9-, and 12-month tenors as Bank Indonesia’s main monetary liquidity expansion instrument for banks.

The second policy measure is to strengthen macroprudential policy effectiveness through an increase in the Bank Foreign Funding Ratio (RPLN) from a maximum of 35% to 40% of bank capital, effective July 1, 2026.

According to Ramdan, the higher ratio is intended to broaden funding sources for banks, particularly from overseas markets, to support lending and financing activities while maintaining prudential principles.

Bank Indonesia will also work closely with the government and other stakeholders to encourage lending through the Indonesian Intermediation Acceleration Program (PINISI).

In addition, the central bank will publish a transparency assessment of Prime Lending Rates (SBDK), including deeper analysis of lending rates in priority sectors covered by the Macroprudential Liquidity Incentive Policy (KLM).

The third policy measure focuses on strengthening payment system digitalization in line with the Indonesia Payment System Blueprint (BSPI) 2030 to support economic growth, expand the digital economy, and promote financial inclusion.

As part of this effort, Bank Indonesia will extend credit card and National Clearing System (SKNBI) tariff policies through December 31, 2026.

The extension includes maintaining the minimum credit card payment requirement at 5% of the total outstanding balance, as well as a late payment penalty capped at 1% of the total bill and no more than Rp100,000.

The SKNBI transfer fee will remain Rp1 from Bank Indonesia to banks and a maximum of Rp2,900 from banks to customers.

The central bank will also expand digital financial acceptance through the QRIS Jelajah Indonesia 2026 program and cross-border QRIS initiatives. Further implementation of the Indonesian Digital Innovation Center (PIDI), including the Digital Talenta Berdaya dan Berkarya (Digdaya) program and hackathons, will continue in synergy with government programs such as KATALIS P2DD and Digdaya.

The fourth policy measure is to deepen the Money Market and Foreign Exchange Market (PUVA) to make them more advanced, efficient, and prudent, thereby increasing foreign investment appeal and enhancing monetary policy effectiveness, including rupiah stabilization.

To support this objective, Bank Indonesia will expand the PUVA ecosystem in terms of products, pricing, market participants, and infrastructure, while promoting the use of Local Currency Transactions (LCT) with partner countries to facilitate trade and investment.

The central bank will also strengthen prudential principles by lowering the threshold for cash foreign currency purchases against rupiah without underlying transactions to US$10,000 per individual or entity per month, effective July 1, 2026.

In addition, prudential measures for Foreign Exchange Traffic (LLD) reporting will be strengthened by lowering the threshold for supporting documentation requirements on outgoing foreign currency transfers from above the equivalent of US$50,000 to above the equivalent of US$25,000, effective July 1, 2026.

The fifth policy measure involves expanding international cooperation with other central banks in areas related to central banking, including payment system connectivity and local currency transactions, while facilitating investment and trade promotion in priority sectors in collaboration with relevant institutions.

Ramdan added that Bank Indonesia will continue strengthening policy coordination with the government, including close synergy between monetary and fiscal policies to mitigate the impact of global uncertainty stemming from the conflict in the Middle East on the domestic economy, thereby preserving economic stability and growth.

Policy coordination with the Financial System Stability Committee (KSSK) will also be intensified to safeguard financial system stability and support financing for the government’s Asta Cita development agenda.