Indonesia interest rates remained unchanged on October 21, 2026, as Bank Indonesia held its benchmark BI-Rate at 5.75% to support the rupiah amid external pressures. The central bank also announced phased reductions in bank reserve requirements for November and December, pairing currency-focused monetary policy with measures intended to support lending and economic growth.
Key Takeaways
- Bank Indonesia held the BI-Rate at 5.75% but raised its Deposit Facility rate to 5.00%.
- Reserve requirements will fall in two stages, effective November 1 and December 1, 2026.
- The central bank is balancing rupiah stability with support for credit growth while targeting inflation of 1.5%–3.5%.
Table of Contents
- Indonesia interest rates stay steady, but the policy mix changes
- Reserve cuts are scheduled for November and December
- Rupiah pressure remains the central policy constraint
- Conclusion
Indonesia interest rates stay steady, but the policy mix changes
At its October 20–21 meeting, Bank Indonesia left the BI-Rate at 5.75% and the Lending Facility rate at 6.50%, while increasing the Deposit Facility rate to 5.00%. The unchanged benchmark therefore did not mean every element of monetary policy remained unchanged.
Bank Indonesia’s October monetary policy decision described a strategy focused on stabilizing the rupiah amid persistently strong external headwinds and keeping inflation within its 2.5% plus or minus one percentage point target in 2026 and 2027.
At the same time, the central bank kept its macroprudential policy oriented toward supporting lending to the real economy. The distinction matters: Bank Indonesia is using separate instruments to address exchange-rate pressure and banking-system liquidity rather than relying on a benchmark rate cut.
| Item | Details |
|---|---|
| Conventional banks: November 1, 2026 | Average reserve requirement falls from 9% to 8%. |
| Conventional banks: December 1, 2026 | Average reserve requirement falls from 8% to 7%. |
| Sharia banks and business units: November 1, 2026 | Average reserve requirement falls from 7.5% to 6.5%. |
| Sharia banks and business units: December 1, 2026 | Average reserve requirement falls from 6.5% to 5.5%. |
Reserve cuts are scheduled for November and December
Bank Indonesia announced two one-percentage-point reductions in average reserve requirements for both conventional and sharia banking institutions. These are scheduled changes, not reductions already in effect at the time of the October decision.
Lower reserve requirements reduce the share of funds banks must hold as required reserves, supporting liquidity available for lending. The package also includes a reduction in the Macroprudential Liquidity Incentive Policy rate from 6% to 5%, effective December 1, alongside changes to the policy’s financing and money-market incentives.
The lending backdrop is already strong but uneven. Bank credit grew 13.26% year over year in September 2026, while third-party funds increased 8.22%. Bank Indonesia said funding growth needed further strengthening to support credit expansion.
Rupiah pressure remains the central policy constraint
The rupiah stood at 17,985 per US dollar on October 20, down 0.61% from the end of September. Bank Indonesia attributed the pressure to Middle East geopolitical tensions, tighter US monetary policy and foreign investor sentiment toward equities.
To support the currency, the central bank strengthened incentives for domestic non-deliverable forward hedging linked to foreign funding. It also reiterated its use of offshore non-deliverable forwards and domestic spot and forward transactions for exchange-rate stabilization.
Inflation remained inside the target range, although headline consumer-price growth rose to 3.28% year over year in September from 3.19% in August. Bank Indonesia continued to project economic growth of 4.9%–5.7% for 2026; that range is a forecast, not a reported annual result.
Conclusion
Bank Indonesia kept its benchmark rate steady while adjusting other tools to defend the rupiah and support bank liquidity. The next confirmed implementation milestone is November 1, when the first reserve-requirement reductions are scheduled to take effect, followed by the second stage and incentive-policy changes on December 1.
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