RDG decision: benchmark held, deposit facility raised

Bank Indonesia (BI) decided to hold its benchmark interest rate, the BI Rate, at 5.75% in the Board of Governors (RDG) meeting held 20–21 October 2026. The decision was announced by BI Governor Destry Damayanti at a press conference in Jakarta on Wednesday (21/10/2026), according to reports from Reuters, Bloomberg Technoz, and IDNFinancials.

While holding the BI Rate, the central bank raised the deposit facility rate by 25 basis points, from 4.75% to 5%. The lending facility rate remained at 6.50%. This marks the fourth consecutive decision to hold rates since BI last raised the BI Rate in June 2026, from 5.50% to 5.75%, after aggressively hiking by a cumulative 100 basis points in three moves across May and June 2026, according to Reuters and Bloomberg Technoz.

Damayanti stressed that monetary policy will remain consistent with the strategy of stabilizing the rupiah amid intensifying external pressure, while keeping inflation on the government's target. The decision was reinforced by increased incentives for domestic non-deliverable forward (DNDF) hedging instruments at BI to attract foreign capital inflows, safeguard rupiah exchange-rate stability, and accelerate the deepening of money and foreign-exchange markets.

Market split, IDX rebounds

The BI decision came amid deeply split market expectations. A Reuters poll of 29 economists conducted 13–19 October showed 15 expecting rates to be held, while the rest expected a hike of at least 25 basis points. A Bloomberg poll of 38 economists was evenly divided, 19 versus 19. Meanwhile, a CNBC Indonesia Research poll of 13 financial institutions showed 10 expecting a 25-basis-point hike to 6.00% and three expecting rates to be held.

In response to the announcement, the IDX Composite (IHSG) rebounded 0.122% to 5,288 at 13:59 WIB, after plunging 1.31% to 5,209.5 earlier in the morning. The rupiah weakened slightly by 0.03% but remained below Rp18,000 per US dollar. Since the start of the year, the rupiah has fallen by around 7.9%, according to IDNFinancials.

Context: rupiah near record low, MSCI threat

Reuters noted the decision came after the currency came under renewed pressure following a warning last week from MSCI that it could relegate Indonesia's equity market from emerging market to standalone market status. The heavy sell-off pushed the rupiah toward an all-time low and left the IDX Composite sharply lower in two consecutive sessions.

By holding the benchmark rate while raising the deposit facility rate, BI signaled it wants to ease rupiah pressure without adding interest-rate burdens to the domestic economy. BI will also keep inflation within the 2.5±1% target for 2026–2027, while foreign-exchange intervention and hedging incentives are prepared to cushion further turbulence.