Bank Indonesia Keeps Benchmark Rate at 5.75%, Hikes Deposit Facility to 5% and Cuts Reserve Requirements to Support Liquidity

JAKARTA, Investortrust.id — Bank Indonesia (BI) maintained its benchmark interest rate, the BI Rate, at 5.75% following its monthly Board of Governors (RDG) meeting on Wednesday, Oct. 21, 2026.

Alongside the policy rate pause, the central bank lifted the Deposit Facility rate to 5.00%—up 25 basis points from 4.75% in September—while holding the Lending Facility rate at 6.50%.

"The Board of Governors meeting on October 20–21 decided to maintain the BI Rate at 5.75% and the lending facility rate at 6.50%, as well as raise the deposit facility rate to 5%," Bank Indonesia Governor Destry Damayanti stated during a press briefing in Jakarta on Wednesday.

By pairing a benchmark rate pause with a targeted deposit facility hike and liquidity-releasing reserve cuts, Bank Indonesia is executing a delicate two-front monetary maneuver. The higher deposit facility rate and deepened foreign-exchange hedging perks bolster yields on onshore balances to stem foreign capital flight and defend the rupiah near the psychological Rp 18,000 threshold. Simultaneously, lowering reserve burdens injects substantial primary liquidity directly into commercial banks, keeping domestic credit pipelines flowing without prematurely easing headline policy rates.

Hedging Incentives to Anchor the Rupiah

Destry explained that the monetary stance remains calibrated to stabilize the rupiah amid intensifying global uncertainties and to anchor domestic inflation firmly within the target range of 2.5% ± 1% for 2026 and 2027.

To reinforce external buffers, Bank Indonesia strengthened its incentive framework for Domestic Non-Deliverable Forward (DNDF) hedging contracts executed directly with the central bank.

"This is undertaken to attract foreign capital inflows, maintain exchange rate stability for the rupiah, and accelerate money and foreign exchange market deepening," Destry said.

Earlier on Wednesday morning, the domestic currency had edged up 0.04% to trade at Rp 17,984 per greenback, moving in line with selective gains in the Malaysian ringgit and Indian rupee. The rebound was supported by an easing U.S. Dollar Index (DXY) to 101.70, moderating long-term U.S. Treasury yields, and a slight pullback in Brent crude to $108.80 per barrel.

Bank Mandiri Chief Economist Andry Asmoro projected the currency to trade within an intraday range of Rp 17,970 to Rp 18,040 per dollar. Andry cautioned that persistent portfolio outflows and ongoing investor scrutiny regarding global index provider MSCI Inc. continue to pose lingering depreciation risks, making clear policy guidance from the central bank pivotal for broader asset markets.

Teuku Riefky, an economist at the Institute for Economic and Social Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), noted that keeping the primary rate unchanged balances currency defense against domestic demand.

"Any monetary tightening must be carefully measured against the potential drag of tighter financial conditions on domestic consumption and broader economic growth," Riefky said, pointing to the risk of continued foreign capital flight under proposed MSCI reclassifications.

Slashing Statutory Reserve Requirements to Ease Bank Liquidity

In a major macroprudential adjustment, Governor Destry announced a two-phase reduction in the primary statutory reserve requirement (GWM) across both conventional and Islamic lenders to reinforce rupiah liquidity.

For conventional commercial banks (BUK), the reserve requirement will be trimmed by a total of 200 basis points from 9% to 7%. A 100-basis-point reduction from 9% to 8%, effective Nov. 1, 2026 will be followed by a second 100-basis-point cut from 8% to 7%, effective Dec. 1, 2026.

For Islamic commercial banks (BUS) and Islamic business units (UUS), the GWM requirement will be lowered from 7.5% to 5.5% in two matching stages. First, a 100-basis-point drop from 7.5% to 6.5% will be effective Nov. 1, 2026. Then, a further 100-basis-point reduction from 6.5% to 5.5% is to be effective Dec. 1, 2026.

Destry noted that the liquidity relaxation is accompanied by adjustments to the Macroprudential Liquidity Incentive (KLM) policy framework, where the incentive ceiling will adjust from 6% to 5% effective Dec. 1, 2026. Concurrently, the portion of average rupiah GWM compliance eligible for central bank remuneration will be capped at a maximum of 5%, also taking effect on Dec. 1.

The central bank emphasized that it will continue optimizing its monetary toolkit, orchestrating money market yield structures, and maintaining pro-market market operations to defend external resilience while supporting durable domestic economic expansion.