Bank Indonesia unexpectedly left its benchmark interest rate unchanged at 5.75% at its meeting on July 22, 2026, defying market expectations of a 25-basis-point increase. This pause follows 25-basis-point hikes at each of the previous two meetings, which were aimed at stabilizing the rupiah, containing price pressures amid persistent external risks, and supporting economic growth.
Since May, the central bank 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 been under pressure. Annual inflation accelerated to 3.34% in June from 3.08% in May, moving closer to the upper bound of Bank Indonesia’s 1.5%–3.5% target range.
Nonetheless, the central bank expects inflation to remain within the government’s 2.5% ± 1% target band and has reaffirmed its 2026 economic growth forecast of 4.9%–5.7%. Bank Indonesia also kept the rates on its overnight deposit facility and lending facility unchanged at 4.75% and 6.5%, respectively.
