Bank Indonesia (BI) maintained its benchmark BI Rate at 5.75% following its Board of Governors Meeting on 20–21 October 2026, while raising the Deposit Facility rate by 25 basis points to 5%. The central bank also kept its Lending Facility rate unchanged at 6.50%.
BI Governor Destry Damayanti said the decision was intended to maintain rupiah exchange rate stability amid continued external pressures, particularly geopolitical tensions in the Middle East and expectations of prolonged monetary tightening in the United States.
The central bank also strengthened incentives for Domestic Non-Deliverable Forward (DNDF) hedging transactions to encourage foreign capital inflows and support the development of Indonesia's money and foreign exchange markets.
According to BI, the rupiah stood at IDR 17,985 per USD on 20 October 2026, depreciating by 0.61% from its position at the end of September. The central bank attributed the depreciation to geopolitical tensions, tighter US monetary policy and foreign investor sentiment in Indonesia's equity market.
BI reported that its hedging and local currency transaction incentive policies, introduced in June 2026, had attracted USD 9.9 billion in foreign capital inflows as of 20 October.
The central bank projected global economic growth of approximately 3% in 2026, with inflationary pressures of around 4.6%. It also noted that elevated global commodity prices and expectations of higher US interest rates continued to influence international financial markets.
Alongside its interest rate decision, BI announced a gradual reduction in banks' reserve requirements to increase rupiah liquidity. For conventional commercial banks, the reserve requirement will decrease from 9% to 8% on 1 November 2026 and subsequently to 7% on 1 December. Requirements for Islamic commercial banks and Islamic banking units will also be reduced from 7.5% to 5.5% over the same period.
Bank lending increased by 13.26% year-on-year in September 2026, supported by investment credit growth of 23.20%, working capital credit growth of 11.89% and consumer credit growth of 4.86%.
Meanwhile, third-party funds grew by 8.22% year-on-year. BI maintained its projection for overall credit growth in 2026 at 8–12% and reiterated its commitment to using macroprudential liquidity incentives to support lending while maintaining financial stability.
Indonesia's consumer price inflation reached 3.28% year-on-year in September 2026, compared with 3.19% in August. Core inflation stood at 2.84%, while volatile food inflation reached 5.03%, partly due to weather-related production disruptions in several agricultural regions.
BI maintained its inflation target of 2.5% ± 1 percentage point for both 2026 and 2027.
For the domestic economy, the central bank projected growth of between 4.9% and 5.7% in 2026. It also reported foreign exchange reserves of USD 146.3 billion at the end of September, equivalent to approximately 5.3 months of imports.
BI stated that its monetary, macroprudential and payment system policies would continue to focus on exchange rate stability, inflation control, financial system resilience and sustainable economic growth.
