Bank Indonesia raised the BI-Rate by 25 basis points to 5.75% on Thursday, its third increase in about four weeks, extending the tightening cycle it began with a 50 basis-point hike in May. The decision was taken at the Board of Governors' meeting on 17-18 June 2026 and announced by Governor Perry Warjiyo on 18 June.
The three increases add up to 100 basis points in about a month. It follows a 25 basis-point off-cycle hike on 9 June, which itself came after the outsized 50 basis-point increase delivered in May.
THIRD HIKE IN FOUR WEEKS
Bank Indonesia also raised the Deposit Facility rate by 25 basis points to 4.75% and the Lending Facility rate by 25 basis points to 6.50%. At the same time, the governor said macroprudential policy would remain accommodative to support lending to the real economy.
Perry said the rupiah stood at Rp17,730 per US dollar on 17 June, 0.76% stronger than at the end of May.
He said the bank expected the rupiah to be stable and tend to strengthen, supported by its commitment, attractive yields and a still-favourable growth outlook.
CURRENCY AND EXTERNAL PRESSURES
The tightening cycle has come as the rupiah weakened under pressure from global turmoil linked to the war in the Middle East, strong domestic demand for foreign currency and outflows of foreign portfolio investment; the currency touched Rp18,000 per dollar before the 9 June hike. Bank Indonesia said the hikes were also meant to make domestic financial assets more attractive and draw foreign portfolio investment back into Indonesia.
The Board of Governors said the increase was a further step to strengthen rupiah stability amid high global uncertainty, and a pre-emptive step to keep inflation in 2026 and 2027 within the government's 2.5±1% target range. Bank Indonesia has for some time framed its policy setting around a joint objective of price and exchange-rate stability, with the BI-Rate as the primary lever.
The Board of Governors next meets in July.
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