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Indonesian rupiah outlook shifts after Bank Indonesia holds rate at 5.75%

After a policy pause, expectations remain for three more rate hikes totaling 75 bps by end-2026, UOB says, as USD/IDR ticked higher on the perceived hawkish hold.

Reported · Written up by our desk · EM Currencies

Bank Indonesia kept its policy rate at 5.75%, a decision UOB Global Economics and Markets Research said is meant to let earlier tightening work through. Despite the pause, UOB expects three further hikes totaling 75 bps by end-2026 to support the rupiah and anchor inflation expectations.

FXStreet reported that USD/IDR edged slightly higher after markets interpreted the hold as hawkish, even though the rate increase cycle was not resumed immediately.

UOBs view comes as the rupiah outlook remains tied to how inflation expectations evolve and whether additional tightening is needed to stabilize the currency over the next two years.

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