Indonesia: BI’s back-to-back 25bp hikes within a week

Research evidence excerpt

Indonesia: BI’s back-to-back 25bp hikes within a week

Nomura | Asia Insights 18 June 2026

Fig. 2: Indonesia: BI corridor and our forecasts Fig. 3: Indonesia - Current account balance

Source: Bloomberg, BI, CEIC, Nomura Global Economics

Source: CEIC, Nomura Global Economics

… but acknowledge high uncertainty

However, we acknowledge high uncertainty in our forecast of additional hikes, which will

still depend on both external and domestic factors that might adversely affect the currency.

We note that some of these concerns could force BI to deliver more hikes than our

forecast and/or deliver them earlier:

• We see the risk that SRBI inflows reverse quickly because, as we have been arguing

before, these are likely pro-cyclical and short-term in nature. We think that raising

SRBI yields also has limits because of side effects, such as potentially crowding out

government bonds and tightening domestic liquidity conditions, as evident last year

(see AsiaInsights-Indonesia:PostcardfromJakarta, 11 November 2025), and this

would contradict BI’s money supply growth target.

• The inflation outlook could deteriorate significantly if a severe El Niño takes hold. Our

preliminary estimate sees inflation reaching 3.1% y-o-y in June. Adding the non-

subsidized fuel prices adjustment, it will likely lead to headline inflation reaching the

upper-end of BI’s inflation target.

• Recent changes in the financial law, which include the expansion of BI’s mandate to

include both economic growth and job creation, as well as performance evaluation of

BI officials by parliament could raise market participants’ concerns over central bank

independence and raise the risk of more capital outflows (FirstInsights-Indonesia:

Thoughtsonthefinancialsectorlawrevisionspassedbyparliament, 4 June 2026).