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Bank Indonesia holds BI Rate at 5.75%, flags risk from IDR

The central bank kept the rate steady for a second meeting, but Commerzbank expects another 25bp hike to 6.0% by year end if IDR or inflation pressure intensifies.

Reported · Written up by our desk · Central Banks

Bank Indonesia kept the BI Rate unchanged at 5.75% for a second consecutive meeting, aiming to balance inflation and growth considerations while prioritizing rupiah stability amid heightened global volatility, FXStreet reports, citing Commerzbank analysis.

Commerzbank notes that BI expanded hedging incentives and CNY clearing to support inflows and FX stability, while it kept SRBI yields from rising further. The outlet also highlights BI’s view that rising US Treasury yields could require a stronger future response.

According to FXStreet, BI maintained its 4.9% to 5.7% GDP forecast and sees another 25bp hike to 6% by year end if IDR weakness or inflation risks intensify. The analysis points to USD/IDR stabilizing around 17,830 after strengthening market confidence following President Prabowo’s budget speech.

FXStreet adds that USD/IDR was down 0.1% to 17,833 and remains within a roughly 17,650 to 18,200 range since early June. It also references market developments such as FTSE deferring Indonesian equity index changes to December and MSCI reviewing Indonesia’s market status in November.

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