Indonesia Watch: BI hikes again, but more delicate balancing act ahead

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Indonesia Watch: BI hikes again, but more delicate balancing act ahead

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Indonesia Watch

BI hikes again, but more delicate balancing

act ahead

We expect further tightening moves to be more calibrated 19 June 2026

BI raised its policy rate as we had expected, and tightened FX purchase curbs. We see BI GEM Economics

hiking again by another 25bps in 3Q26, aimed at steering USD-IDR towards its “target” Asia | Indonesia

of 16,800 – 17,500 and to pre-empt rising inflation risks. We see risks of more BI rate

Kai Wei Ang

hikes should the Fed turn even more hawkish (see report). That said, we expect the pace ASEAN Economist

and magnitude of further hikes (including for SRBI) to be more calibrated going forward, Merrill Lynch (Singapore)

+65 6678 5518

given the marked tightening in domestic liquidity conditions in recent weeks. kaiwei.ang@bofa.com

Rahul Bajoria

India & ASEAN EconomistPolicy rate raised again to anchor IDR stability… BofAS India

BI raised its policy rate by 25bps to 5.75%. This followed the surprise off-cycle 25bps

hike last Tuesday (see report) and outsized 50bps hike in the May policy meeting (see

report). BI said the “main goal” is to attract FX inflows – since end-May, we noted that Glossary:

foreign holding of (a) SRBI has risen by IDR 21tn to IDR 238tn (Exhibit 1), and (b)

government bonds has risen by IDR 9tn to IDR 871tn (Exhibit 2). BI: Bank Indonesia

…& FX purchase curbs tightened for the 3rd time this year MOF: Ministry of Finance

From 1st Jul, the monthly threshold for FX purchases without underlying documents will NDF: Non-Deliverable Forward

be lowered to $10K, and is expected to cover 98.1% of FX spot transactions. This

follows two rounds of earlier tightening – from $100K to $50K from 1st April and SRBI: Bank Indonesia Rupiah