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2026-05-20 16:09:07
[Bank Indonesia Raises Interest Rates by 50 Basis Points to 5.25%, First Hike Since April 2024] ⑴ At its May 2026 policy meeting, Bank Indonesia raised its benchmark interest rate by 50 basis points to 5.25%, exceeding market expectations of a 25 basis point increase to 5%. This marks the first rate hike by the central bank since April 2024, aiming to strengthen the Indonesian rupiah, curb imported inflation risks, and keep inflation within the government's target range of 2.5% ± 1%. ⑵ The rupiah depreciated by 2.2% from the end of April to May 19, reaching 17,700 rupiah per US dollar. Meanwhile, the annual inflation rate in April 2026 slowed to 2.42% from 3.48% in March, the lowest since August 2025, remaining within the central bank's target range. ⑶ This decision aligns with the "steady progress" approach of monetary policy, aiming to strengthen Indonesia's external resilience amidst global uncertainties. At the same time, macroprudential and payment system policies remain geared towards "promoting growth." The Indonesian central bank also raised the overnight deposit facility rate to 4.75% and the lending facility rate to 6.0%.
