{"id":652,"date":"2026-07-23T10:22:13","date_gmt":"2026-07-23T09:22:13","guid":{"rendered":"https:\/\/theindodaily.com\/?p=652"},"modified":"2026-07-24T10:23:06","modified_gmt":"2026-07-24T09:23:06","slug":"bank-indonesia-holds-benchmark-bi-rate-at-5-75","status":"publish","type":"post","link":"https:\/\/theindodaily.com\/index.php\/2026\/07\/23\/bank-indonesia-holds-benchmark-bi-rate-at-5-75\/","title":{"rendered":"Bank Indonesia holds benchmark BI Rate at 5.75%"},"content":{"rendered":"\n

(TheIndoDaily) – Bank Indonesia has decided to hold benchmark BI Rate at 5.75% as a move to maintain economic and financial stability as well as support the government’s ‘pro-growth’ drive. Bank Indonesia made the decision at its Board of Governors Meeting held on July 21-22, 2026. Additionally, the central bank decided to maintain Deposit Facility Rate at 4.75% and the Lending Facility Rate at 6.50%.<\/strong><\/p>\n\n\n\n

Bank Indonesia implemented a series of incentive policies alongside other measures aimed at enhancing foreign portfolio investment inflows and stabilizing the Rupiah’s exchange rate. This includes accelerating money market and foreign exchange market deepening (PUVA), as well as boosting liquidity and reducing liquidity segmentation in financial and banking markets.<\/p>\n\n\n\n

In a statement issued after the meeting, BI said the decision regarding the BI-Rate and accompanying policies is part of an integrated policy mix that Bank Indonesia continues to implement to bolster the Rupiah’s stability amidst ongoing global uncertainty. This is also intended to maintain inflation within the government’s target range of 2.5\u00b11% for 2026 and 2027, focusing on “pro-stability” measures.<\/p>\n\n\n\n

Concurrently, macroprudential and payment system policies are designed to foster economic growth, aligning with “pro-growth” objectives. The easing of macroprudential policies is further strengthened to drive economic growth by channeling more credit to the real sector while safeguarding financial system stability. Payment system policies continue to support economic activities by expanding digital payment acceptance, reinforcing payment system industry’s structure, and enhancing the reliability and resilience of payment infrastructures.<\/p>\n\n\n\n

To support sustainable economic growth and strengthen stability, the policy direction encompasses:<\/p>\n\n\n\n

    \n
  1. Enhancing monetary policy implementation to stabilize the Rupiah’s exchange rate and control inflation within the government’s target for 2026 and 2027 through:<\/li>\n<\/ol>\n\n\n\n
      \n
    • Optimal foreign exchange intervention strategies to stabilize the Rupiah’s value, utilizing Non-Deliverable Forward (NDF) transactions in foreign markets and spot and Domestic Non-Deliverable Forward (DNDF) transactions domestically.<\/li>\n\n\n\n
    • Managing money market interest structures aligned with BI-Rate policy and pro-market monetary operation instruments.<\/li>\n\n\n\n
    • Ensuring adequate liquidity in money markets and banking with primary money growth exceeding 10%, in line with monetary expansion goals.<\/li>\n<\/ul>\n\n\n\n

      2. Expanding incentive policies to increase foreign portfolio investment inflows and stabilize the Rupiah’s exchange rate while hastening PUVA deepening by:<\/p>\n\n\n\n

        \n
      • Increasing and broadening incentive reductions for foreign portfolio investment premiums: a rise in hedging sales swap incentives from 10% to 12.5% and broader DNDF hedging sales incentives by 15%.<\/li>\n\n\n\n
      • Incentivizing Local Currency Transactions (LCT) with partner countries through forex transaction diversifications: increasing hedging sales swap premiums by 10% and reducing DNDF hedging sale premiums by 10%.<\/li>\n<\/ul>\n\n\n\n

        3. Enhancing expansion and addressing liquidity segmentation in the money market and banking through the refinement of Macroprudential Liquidity Incentive Policies (KLM), integrating market deepening acceleration with:<\/p>\n\n\n\n

          \n
        • Expanding underlying repo transactions in conventional monetary operations and Shariah-based Liquidity Management under Bank Indonesia principles (PASBI) by including bonds or sukuk from PT. Sarana Multi Infrastruktur (SMI) and PT. Sarana Multigriya Finansial (SMF), starting no later than late September 2026.<\/li>\n\n\n\n
        • Refining KLM to boost expansion while addressing liquidity segmentation, supporting credit distribution to priority sectors by increasing total acceptable KLM incentives for banks to a maximum of 6.0% from third-party funds, up from the previous 5.5%.<\/li>\n\n\n\n
        • Adjusting KLM allocation for financing channels that provide bank loans\/financing credit to priority sectors from a previous high of 4.5% to now 4.0%.<\/li>\n\n\n\n
        • Setting KLM allocations for addressing liquidity segmentation in banking and money markets while accelerating market deepening through a Money Market Deepening KLM (PPU) that can reach up to 2.0% from third-party funds for banks maintaining optimal security holdings as determined by Bank Indonesia, replacing previous interest-based KLM policies.<\/li>\n<\/ul>\n\n\n\n

          Global Uncertainty<\/strong>
          Global uncertainty has once again risen following the re-escalation of conflict between the United States and Iran in early July 2026. Traffic through the Strait of Hormuz has become disrupted, affecting production and international trade supply chains, while global oil and commodity prices have surged upwards. The global economic growth forecast for 2026 remains weak at 3.0%, and global inflation is anticipated to increase to around 4.5%.<\/p>\n\n\n\n

          In response to the mounting inflationary pressures, global monetary policies have tightened. The U.S. Federal Reserve’s interest rate, known as the Fed Funds Rate (FFR), is expected to rise earlier than previously predicted, potentially as soon as the fourth quarter of 2026. Treasury yields have also climbed sharply, reaching levels of 4.56% for 10-year treasuries and 4.18% for 2-year treasuries by July 20, 2026, largely driven by a widening U.S. fiscal deficit.<\/p>\n\n\n\n

          In global financial markets, there has been a capital flight from emerging markets towards U.S. financial markets and high-yield, safe-haven assets. This shift has strengthened the U.S. dollar against both major and emerging market currencies, as indicated by indices such as DXY and ADXY. The renewed uncertainty in the global economic and financial landscapes necessitates reinforced fiscal and monetary policy responses to bolster external resilience, maintain stability, and drive domestic economic growth.<\/p>\n\n\n\n

          Amidst these challenges, Indonesia’s economic growth remains robust, primarily supported by domestic demand. Developments in the second quarter of 2026 show significant growth in government consumption, fueled by continued implementation of priority programs and accelerated government spending. Key initiatives include the distribution of the 13th salary for civil servants and social aid for beneficiary families.<\/p>\n\n\n\n

          Household consumption is sustained through various government stimuli, such as food assistance, transportation fare reductions, and national vocational training and internship programs. Investment is primarily driven by building investments aligned with implementing National Priority Work Programs (PKPN), although private sector investment still requires further enhancement.<\/p>\n\n\n\n

          On the external front, export performance needs continuous strengthening to capitalize on high global commodity prices amidst slowing global economic growth. Sectorally, growth in manufacturing, construction, transportation, and warehousing remains healthy, in line with government program implementations.<\/p>\n\n\n\n

          Looking ahead, the implementation of various government priority programs will be optimized to boost economic growth sources from domestic demand and reinforce economic growth structures. Concurrently, Bank Indonesia will continue to fortify its policy mix through monetary, macroprudential, and payment system strategies that closely align with government policies to preserve stability while fostering sustainable economic growth. Bank Indonesia forecasts Indonesia’s economic growth in 2026 to range between 4.9% and 5.7%.<\/p>\n\n\n\n

          By Staff Writer
          Edited by Roffie Kurniawan<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

          (TheIndoDaily) – Bank Indonesia has decided to hold benchmark BI Rate at 5.75% as a move to maintain economic and financial stability as well as support the government’s ‘pro-growth’ drive. Bank Indonesia made the decision at its Board of Governors Meeting held on July 21-22, 2026. Additionally, the central bank decided to maintain Deposit Facility […]<\/p>\n","protected":false},"author":1,"featured_media":653,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[],"_links":{"self":[{"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/posts\/652"}],"collection":[{"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/comments?post=652"}],"version-history":[{"count":2,"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/posts\/652\/revisions"}],"predecessor-version":[{"id":655,"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/posts\/652\/revisions\/655"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/media\/653"}],"wp:attachment":[{"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/media?parent=652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/categories?post=652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/theindodaily.com\/index.php\/wp-json\/wp\/v2\/tags?post=652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}