Bank Indonesia (BI) on Wednesday, 23 September 2026, kept its benchmark BI-Rate unchanged at 5.75% at the end of a two-day Board of Governors meeting in Jakarta, the first policy meeting chaired by Destry Damayanti since her appointment as governor this month. The central bank also held its deposit facility rate at 4.75% and its lending facility rate at 6.50%, according to a Bank Indonesia statement.
The decision was in line with market expectations: 29 of 32 economists polled by Reuters had predicted a hold, Nikkei Asia reported. Follow the region on our business hub and Indonesia hub.
Key takeaways
- BI held the BI-Rate at 5.75%, with the deposit and lending facility rates at 4.75% and 6.50%.
- The bank increased incentives on foreign exchange hedging instruments to draw capital inflows and steady the rupiah.
- Destry, BI’s first woman governor, said the stance supports the currency, inflation goals and growth.
Stability first, with the rupiah in focus
BI said the decision is consistent with its strategy of stabilising the rupiah amid persistently strong external headwinds, keeping inflation within its 2.5% plus or minus 1% target range in 2026 and 2027, and supporting sustainable growth. Destry delivered that message at BI’s first in-person press conference after a rate decision in a year and a half, Nikkei Asia said.
The central bank raised rates by 100 basis points in three moves over May and June to defend the rupiah as it slid to record lows against the US dollar. The currency recovered some ground after June but has weakened again in recent weeks on investor concerns about Indonesia’s fiscal outlook as oil prices rise, according to Nikkei Asia’s Reuters report. On the day of the decision, the rupiah strengthened and ended up 0.36% against the dollar.
New tools instead of another hike
Rather than raising rates again, BI leaned on market tools. It said it would optimise foreign exchange intervention in offshore non-deliverable forwards and in the domestic spot and domestic non-deliverable forward (DNDF) markets.
It also sweetened incentives for hedging linked to foreign funding such as portfolio inflows, bank borrowing abroad and foreign direct investment. For hedging swap transactions with BI, it raised the premium reduction from 12.5% across all tenors to 15% for three-month, 20% for six-month and 25% for 12-month contracts. For DNDF hedging with BI, the premium reduction rises from 15% to 25% for six-month and 30% for 12-month tenors, the statement said.
Leadership change and investor worries
Parliament approved Destry as governor in September, making her the first woman to lead BI. She was interim chief at the August meeting, when rates were also held, after the surprise resignation of Governor Perry Warjiyo in late July, Nikkei Asia reported.
Warjiyo’s exit had added to investor worries about political interference at the central bank, after President Prabowo Subianto appointed his nephew to a senior BI role and parliament expanded the bank’s mandate to include supporting growth. Nikkei Asia said Destry’s appointment was nonetheless welcomed by markets. Concerns over fiscal spending and transparency issues at the stock exchange have triggered capital outflows, while risk aversion linked to the Middle East war and higher global interest rates has also weighed on Indonesian assets.
Inflation and growth outlook
Annual inflation picked up to 3.19% in August but stayed within the target range, helped by government fuel subsidies. BI kept its 2026 growth forecast at 4.9% to 5.7% and recently nudged its 2027 range up slightly to 5.2% to 6%, according to Nikkei Asia.
For businesses, the hold means borrowing costs stay elevated after this year’s hikes, but BI is signalling that it prefers targeted currency tools over further rate increases for now.
