2026.06.1807:33:28UTC+00Indonesia Hikes Rates to Support Rupiah

At its scheduled meeting on June 18, 2026, Bank Indonesia raised its benchmark interest rate by 25 basis points to 5.75%, in line with market expectations. The move followed an unscheduled 25-basis-point hike on June 9, undertaken to support the rupiah, contain inflation, and underpin economic growth. In total, the central bank has increased its policy rate by 100 basis points since May, bringing it to its highest level since April 2025.

Indonesia’s annual inflation rate accelerated to 3.08% in May from 2.42% in April, approaching the upper bound of Bank Indonesia’s 1.5%–3.5% target range. Even so, the central bank still expects inflation to remain within the government’s target of 2.5% ± 1% and left its 2026 economic growth forecast unchanged at 4.9%–5.7%.

On the currency front, the rupiah strengthened to Rp 17,730 per US dollar on June 17, 2026, marking a 0.76% appreciation from end-May levels. In addition to the policy rate hike, Bank Indonesia also increased the rates on its overnight deposit facility and lending facility by 25 basis points each, to 4.75% and 6.50%, respectively.