On June 9, 2026, Indonesia’s central bank raised its benchmark BI-Rate by 25 basis points to 5.50%. This was an unscheduled move. It followed a 50 basis point hike on May 20, bringing the total tightening over three moves in a month to 75 basis points, with the rate jumping from 4.75% to 5.50%.
Why Indonesia is scrambling
The target of all this monetary firepower is the Indonesian rupiah, which has been sliding under pressure from geopolitical tensions in the Middle East. These are the first tightening moves by Bank Indonesia since 2024. Going from dormant to three hikes in roughly 30 days is monetary policy whiplash.
Governor Perry Warjiyo framed the decisions as essential for financial stability in a volatile global economic landscape. The central bank is also deploying foreign exchange interventions and announcing incentives to attract foreign portfolio investment, suggesting that rate hikes alone aren’t considered sufficient.
Bank Indonesia’s inflation target for 2026-2027 sits at 2.5%, plus or minus one percentage point.
