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Bank Indonesia Seen Hiking Again as Markets Demand More Support for Rupiah and Assets

By Chee Liang CFA3 min read

JAKARTA, 21 May 2026 – Bank Indonesia may need to raise interest rates again after its surprise half-point hike, as investors remain unconvinced that one aggressive move will be enough to stabilise the rupiah and restore confidence in Indonesian assets.

The central bank raised its benchmark seven-day reverse repurchase rate by 50 basis points to 5.25%, marking its first rate increase in two years. It also lifted the overnight deposit facility rate to 4.25% and the lending facility rate to 6.00%, in a stronger-than-expected move aimed at defending the rupiah and preventing inflation risks from becoming entrenched.

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Author

  • Chee Liang CFA

    Chee Liang CFA specializes in financial advice and global economic trends, delivering clear insights to help readers navigate markets, investments, and the shifting dynamics of the world economy.