Indonesia Watch: BI’s surprise off-cycle rate hike aimed at reinforcing FX stability credentials

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Indonesia Watch: BI’s surprise off-cycle rate hike aimed at reinforcing FX stability credentials

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Indonesia Watch

BI’s surprise off-cycle rate hike aimed at

reinforcing FX stability credentials

Surprise 25bps off-cycle policy rate hike 10 June 2026

BI said the decision took place during its weekly Tuesday meeting. A slew of policy GEM Economics

measures was also rolled out (see BI policy statement), with BI seemingly “all in” to Asia | Indonesia

attract portfolio flows amid excessive IDR depreciation. We presently see BI hiking again

Kai Wei Ang

by 25bps at the coming regular policy meeting on 17th Jun. ASEAN Economist

Merrill Lynch (Singapore)

Key highlights from BI post-policy investor call +65kaiwei.ang@bofa.com6678 5518

BI Governor Perry addressed around 30 questions fielded by investors in a post-policy Abhay Gupta

investor call. Overall, the strategy appears geared toward increasing yield differentials Emerging Asia FI/FX Strategist

and lowering transaction costs to attract offshore inflows. Key pointers: +65 6678 0427

abhay.gupta2@bofa.com

#1: Consensus now is to stabilize FX – With the economy facing unprecedented Claudio Piron

global spillovers, policy efforts are geared towards strengthening external resilience, as a Emerging Asia FI/FX Strategist Merrill Lynch (Singapore)

foundation for supporting domestic economic prospects. +65 6678 0401

claudio.piron@bofa.com

#2: BI is actively assessing attractiveness of its 2Y and 10Y yields relative to US Rahul Bajoria

Treasuries and other peer groups in Asia, India & ASEAN Economist BofAS India

+91 22 6632 3095

#3: As part of broader efforts to make the yield curve more market-driven, BI will rahul.bajoria@bofa.com

refrain from purchasing government bonds with tenors ≥10Y in the secondary market,