May 20, 2026 | 03:58 pm
TEMPO.CO, Jakarta - Bank Indonesia (BI) has decided to raise its benchmark interest rate, the BI-Rate, by 50 basis points (bps) to 5.25 percent. The decision was finalized during the Board of Governors Meeting held on Tuesday and Wednesday, May 19–20, 2026.Concurrently, the deposit facility interest rate was raised by 50 bps to 4.25 percent, while the lending facility rate saw a similar 50 bps increase to 6 percent.BI Governor Perry Warjiyo explained that the rate hike is a calculated step to fortify the stability of the rupiah amid heightened global market turbulence triggered by the ongoing conflict in the Middle East."It is also a preemptive measure to ensure that inflation in 2026 and 2027 remains well within the government's target corridor of 2.5 percent, plus or minus 1 percent," Perry said during a virtual press conference following the meeting in Jakarta on Wednesday, May 20, 2026, as reported by Antara.Perry elaborated that the move aligns with BI's 2026 monetary policy focus, which prioritizes stability to shield Indonesia’s external economic resilience from global shocks. Meanwhile, macroprudential and payment system frameworks will continue to be leveraged to spur domestic growth.Furthermore, Perry assured that accommodative macroprudential policies will be reinforced to drive economic momentum, specifically by expanding credit financing to the real sector while preserving the overall stability of the financial system.Separately, President Prabowo Subianto recently targeted the rupiah exchange rate against the US dollar within a range of Rp16,800 to Rp17,500 for the 2027 fiscal year. "Our fiscal and monetary strategies must be able to maintain the stability of our currency," Prabowo stated during the 19th Plenary Session of the House of Representatives (DPR) on Wednesday, May 20, 2026.This targeted range marks a shift from the 2026 State Budget baseline, which was previously anchored at Rp 16,500 per US dollar. The revised figures were presented by Prabowo while outlining the Macroeconomic Framework and Key Fiscal Policy (KEM-PPKF) during today's parliamentary session.In addition to the exchange rate, the Head of State outlined several core macroeconomic assumptions for the 2027 State Budget. Prabowo is targeting economic growth between 5.8 and 6.5 percent, while capping inflation at a 1.5 to 3.5 percent range. Meanwhile, the yield for 10-year government bonds is projected at 6.5 to 7.3 percent.Additionally, the Indonesian Crude Price (ICP) target has been set between US$70 and US$95 per barrel. Oil lifting is expected to reach 602,000 to 615,000 barrels per day, while natural gas lifting targets have been placed at 934,000 to 977,000 barrels of oil equivalent per day.Alfitria Nefi contributed to this article.Read: Prabowo Targets Rupiah at 16,800-17,500 per US Dollar by 2027Click here to get the latest news updates from Tempo on Google News
