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Central Bank · Indonesia · Interest Rates · Rupiah Stability
Bank Indonesia (BI) maintained its benchmark seven-day reverse repurchase rate at 4.75% for a fifth consecutive policy review on Thursday, a decision widely anticipated by economists.
The central bank's primary objective is to stabilize the rupiah, which recently slumped to a record low against the dollar and remains among the worst-performing emerging Asian currencies. BI Governor Perry Warjiyo reiterated the bank's commitment to intervene in currency markets, including offshore and onshore non-deliverable forward markets, the spot FX market, and the sovereign bond market, to anchor the "undervalued" rupiah.
This decision follows BI's cumulative 150 basis points in rate cuts between September 2024 and September 2025. Investor sentiment towards Indonesian assets has deteriorated due to concerns over President Prabowo Subianto's high-growth agenda potentially impacting fiscal health and central bank independence.
Recent events, such as the nomination of Prabowo's nephew, Thomas Djiwandono, to the BI board, triggered capital outflows. Furthermore, MSCI warned of a potential downgrade for Indonesian equities due to market opacity, and Moody's downgraded Indonesia's rating outlook to negative, exacerbating market jitters.
BI will continue to assess future room for rate cuts to support GDP growth.
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