Bank Indonesia holds key rate at 5.75% in July 2026, defying hike expectations

The central bank paused after recent tightening, kept its 2026 growth forecast at 4.9%-5.7%, and introduced measures to attract foreign inflows as inflation rose and the rupiah stayed under pressure.

36d ago

Fact Check

Bank Indonesia's own official X account confirms the RDG decided on 21-22 July 2026 to hold the BI-Rate at 5.75%. The WSJ article confirms the hold defied market expectations of a hike and followed a cumulative 100 bps of tightening in May and June, citing prior tightening, rupiah weakness, and Middle East tensions. Trading Economics corroborates the unexpected hold at 5.75% on July 22, 2026. All key elements of the claim are verified by primary and independent sources.

Summary

Bank Indonesia unexpectedly left its key interest rate unchanged at 5.75% at its July 22, 2026 meeting, against expectations for a 25-basis-point increase after tightening since May. Policymakers said they were assessing the effects of earlier rate hikes as the rupiah weakened, Middle East tensions persisted and June inflation accelerated to 3.34% from 3.08% in May, while still expecting inflation to remain within the government's 2.5% plus or minus 1% target band. The central bank kept its 2026 growth forecast at 4.9% to 5.7%, left its overnight deposit and lending facility rates at 4.75% and 6.5%, and announced measures aimed at attracting foreign capital. Indonesian stocks later rose 1.2% to 6,405 in early Thursday trading, their highest level in five weeks.

Terms & Concepts

basis point: A unit equal to one-hundredth of a percentage point, commonly used to describe interest-rate changes.
overnight deposit facility: A central bank facility that allows banks to place short-term funds overnight at a set interest rate.
foreign inflows: Capital entering a domestic market from overseas investors, often into stocks, bonds or other financial assets.