Jakarta. Bank Indonesia (BI) kept its benchmark interest rate at 5.75% on Wednesday while raising its deposit facility rate by 25 basis points to 5.00%, as weak global growth prospects and heightened financial market uncertainty continue to cloud the economic outlook.

“The Bank Indonesia Board of Governors meeting on Oct. 20–21, 2026, decided to maintain the BI Rate at 5.75%,” BI Governor Destry Damayanti said at a press conference on the central bank’s latest policy decision.

BI also maintained its lending facility rate at 6.50%.

Destry said the decision was consistent with the central bank’s projection that inflation would remain low and within its target range of 2.5% plus or minus 1% in 2026.

However, the global economy faces mounting pressure from geopolitical tensions, particularly the escalating conflict in the Middle East, which has kept oil and other commodity prices elevated.

“Global economic growth in 2026 is projected to reach around 3%, while global inflation is forecast at 4.6%. Tight monetary policies in various countries are also expected to persist for longer, a situation known as ‘higher for longer,’” Destry said.

The possibility of further interest rate hikes by the United States Federal Reserve also remains open, keeping US Treasury yields elevated, she added.

“These pressures are in line with rising expectations for the direction of US monetary policy and the widening US government budget deficit,” Destry said.

Meanwhile, investor appetite for portfolio assets in emerging markets remains limited, supporting the US Dollar Index (DXY) against both developed and emerging market currencies.

Against this backdrop, BI said stronger coordination between fiscal and monetary policies would be necessary to bolster external resilience, maintain economic stability and support domestic growth.

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