Key facts
- Bank Indonesia held its benchmark 7-day reverse repurchase rate at 5.75%.
- The decision was in line with market expectations, with 29 of 32 economists polled by Reuters predicting no change.
- The bank also maintained the overnight deposit facility rate at 4.75% and the lending facility rate at 6.50%.
- Governor Destry Damayanti stated the decision aims to stabilize the rupiah, keep inflation within target, and support growth.
- The rupiah was up 0.36% against the dollar on Wednesday.
- Annual inflation rose to 3.19% in August but remained within BI's target range of 1.5% to 3.5%.
Bank Indonesia maintained its key interest rate at 5.75% on Wednesday, a decision that aligned with economists' expectations. The central bank's Monetary Policy Committee also kept the overnight deposit facility rate at 4.75% and the lending facility rate at 6.50%. Governor Destry Damayanti indicated that the decision was made to stabilize the rupiah, ensure inflation remains within the target range, and foster economic growth. This marks the first in-person press conference following a rate decision since May 2025. The bank had previously raised rates by 100 basis points in May and June to counter the rupiah's decline against the dollar, though the currency has since recovered some ground. However, recent weeks have seen renewed weakening due to investor concerns over the fiscal outlook amid rising oil prices. The rupiah strengthened by 0.36% against the dollar on Wednesday following the announcement. Destry Damayanti, who was appointed governor in September, previously served as interim chief. Her appointment was welcomed, though concerns persist among investors regarding potential political interference at the central bank, following President Prabowo Subianto's appointment of his nephew to a senior role and an expansion of the central bank's mandate. Worries about fiscal spending and transparency issues at the stock exchange have contributed to capital outflows, exacerbated by global risk aversion linked to the Middle East conflict and rising interest rates in major economies. Indonesia's annual inflation rate increased to 3.19% in August but remained within Bank Indonesia's target band of 1.5% to 3.5%, partly due to government fuel subsidies. The central bank maintained its economic growth forecast for 2026 at 4.9% to 5.7% and slightly raised its 2027 outlook to 5.2% to 6%.