RDG decision: BI Rate steady at 5.75%, deposit rate raised

Bank Indonesia (BI, the central bank) decided to maintain its benchmark rate, or BI Rate, at 5.75 percent during its Board of Governors Meeting (RDG - Rapat Dewan Gubernur) for the October 20-21, 2026 period. The decision was announced during a press conference at the Thamrin Building, Jakarta, on Wednesday afternoon (21/10/2026).

Despite holding the BI Rate, the central bank raised the deposit facility interest rate by 25 basis points (bps) from 4.75 percent to 5.00 percent. Meanwhile, the lending facility interest rate remained at 6.50 percent.

BI Governor: DNDF incentives to attract foreign capital

"This decision is reinforced by enhancing incentive policies for domestic non-deliverable forward (DNDF) hedging instruments to BI to attract foreign capital inflows, maintain rupiah exchange rate stability, and accelerate the deepening of money and foreign exchange markets," said BI Governor Destry Damayanti during the RDG outcome press conference on Wednesday.

Destry emphasized that this monetary policy remains consistent with the rupiah stabilization strategy amid mounting external pressures, while concurrently keeping inflation targets aligned with government objectives.

IHSG rebounds, rupiah remains below Rp18 thousand

Responding to the announcement, the Composite Stock Price Index (IHSG - Indeks Harga Saham Gabungan) rebounded by 0.122 percent to 5,288 by 1:59 p.m. Western Indonesia Time (WIB). In the morning session, the IHSG had dropped 1.31 percent to 5,209.5.

The rupiah exchange rate weakened slightly by 0.03 percent, yet remained below Rp18,000 per US dollar. Since the beginning of the year, the rupiah has depreciated by around 7.9 percent.

Economists divided: half predicted a hike to 6%

This decision diverged from the forecasts of several economists. A Bloomberg survey ahead of the RDG showed that 19 of 38 economists expected BI to hike the BI Rate by 25 bps to 6.00 percent, while the other 19 projected a hold. A Reuters poll recorded that 15 of 29 economists anticipated a hold, with the remainder forecasting a hike of at least 25 bps.

Earlier, a CNBC Indonesia Research poll of 13 institutions noted that 10 predicted an increase to 6.00 percent and three predicted a hold.

Context: MSCI overhang and aggressive May-June hikes

BI's latest step comes after the central bank aggressively hiked the BI Rate by a cumulative 100 bps across May and June 2026. Since June, the BI Rate had been held at 5.75 percent across four consecutive RDGs, namely in July, August, September, and October.

Pressure on the rupiah has intensified recently after Morgan Stanley Capital International (MSCI) floated a potential reclassification of the Indonesian equity market from emerging market to standalone market status, which triggered foreign investor sell-offs last week. The 10-year Government Securities (SBN - Surat Berharga Negara) yield stood around 7.43 percent, while Indonesia's credit default swap (CDS) risk premium climbed to 98.34.