Bank Indonesia left its benchmark interest rate unchanged at 5.75% at its August 19, 2026 meeting, marking a third consecutive hold and aligning with market expectations. The pause follows a surprise 25-basis-point hike in June, aimed at stabilizing the rupiah and supporting economic growth.
The decision comes amid mounting concerns over the central bank’s independence after the abrupt resignation of Governor Perry Warjiyo last month and the appointment of Senior Deputy Governor Destry Damayanti as interim governor. Since May, Bank Indonesia has raised rates by a cumulative 100 basis points, lifting the policy rate to its highest level since April 2025 in an effort to attract foreign capital inflows and bolster the rupiah, which has faced renewed pressure.
Annual inflation eased to 2.88% in July from 3.34% in June, remaining comfortably within Bank Indonesia’s 1.5%–3.5% target band. The central bank expects inflation to stay within the government’s target of 2.5% ± 1% and has kept its 2026 economic growth forecast unchanged at 4.9%–5.7%.
