BI Holds Policy Rate at 4.75% as Rupiah Pressure Intensifies

JAKARTA, Investortrust.id — Bank Indonesia holds its benchmark interest rate at 4.75% on Wednesday, Jan 21, 2026 in Jakarta to stabilize the rupiah as the currency weakens toward record lows amid rising global uncertainty and capital outflows.

The central bank also maintained the deposit facility rate at 3.75% and the lending facility rate at 5.5% following its January Board of Governors Meeting.

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Bank Indonesia Governor Perry Warjiyo said the decision was consistent with the priority of safeguarding rupiah stability while keeping inflation within the 2026–2027 target of 2.5% plus or minus one percentage point.

“This policy is consistent with our efforts to stabilize the rupiah amid heightened global uncertainty, while continuing to support economic growth,” Perry said.

The policy stance comes as the rupiah has hit fresh record lows over the past four trading days and briefly touched Rp 16,962 per US dollar on Wednesday morning, raising concerns it could soon breach the psychologically important Rp 17,000 level.

Despite the sharp short term pressure, the rupiah’s year to date performance remains broadly in line with its long term depreciation trend observed over the past three decades.

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Global factors continue to dominate currency movements, including a strengthening US dollar index, rising US Treasury yields, and heightened geopolitical tensions involving the United States and Europe.

Perry said Bank Indonesia remains vigilant as the room for cuts in the US Federal Reserve’s policy rate has narrowed, pushing up US bond yields in line with the country’s still wide fiscal deficit.

“These conditions have driven capital outflows from emerging markets and increased volatility in global financial markets,” Perry said.

Bank Indonesia projects global economic growth to slow to 3.2% in 2026 from 3.3% in 2025, with weakness expected across major economies in Asia including Japan, China, and India.

In response, the central bank plans to strengthen monetary and macroprudential policy transmission, while carefully assessing the space for potential rate adjustments should inflation remain under control.

From the macroprudential side, Bank Indonesia continues to deploy liquidity incentive policies to encourage banks to lower lending rates and expand credit to priority sectors aligned with government programs.

The central bank is also pushing digital payment expansion and reinforcing payment system infrastructure to support more inclusive economic growth.

Concerns over the rupiah have prompted closer coordination between fiscal and monetary authorities.

State Secretary Prasetyo Hadi on Wednesday hosted a meeting with Finance Minister Purbaya Yudhi Sadewa and Perry at the Presidential Palace complex to discuss the currency’s recent weakness.

Purbaya said the meeting focused on policy synchronization between the Ministry of Finance and Bank Indonesia.

“I will focus on strengthening fiscal conditions and the broader economy, while the Governor of Bank Indonesia will take the necessary steps to maintain exchange rate stability,” Purbaya said.

He added that the rupiah remains under the central bank’s mandate and stressed confidence in Bank Indonesia’s policy response, saying there was no need for extraordinary measures despite the currency touching all time lows.

Market participants remain cautious, with analysts projecting the rupiah to trade in the range of Rp 16,915 to Rp 17,010 per US dollar in the near term as geopolitical risks and external pressures persist.