Jakarta. Bank Indonesia (BI) kept its benchmark interest rate unchanged at 5.75% on Wednesday, prioritizing rupiah stability as heightened global uncertainty and tighter US monetary policy weigh on emerging markets.

The central bank also maintained its Deposit Facility rate at 4.75% and Lending Facility rate at 6.50%, Deputy Governor Destry Damayanti said after the September 22-23 Board of Governors Meeting (RDG).

“The decision remains consistent with our strategy to stabilize the rupiah amid persistent external pressures, while keeping inflation within target and supporting sustainable economic growth,” Destry said.

Global uncertainty has intensified amid renewed tensions in the Middle East, which pushed oil prices to as high as $132 per barrel before they fell below $100 on Sept. 22. The US Federal Reserve also raised its benchmark rate to 3.75%-4.00% in September, while higher US Treasury yields have weighed on investor appetite for emerging-market assets.

The rupiah stood at Rp 17,855 per US dollar on Sept. 22, weakening 0.78% from the end of August. BI said it would strengthen foreign exchange interventions and expand incentives to attract foreign investment inflows and support currency stability.

Indonesia's economy is projected to grow 4.9%-5.7% this year, supported by government stimulus, improving consumer confidence and investment. Bank lending grew 13.65% year-on-year in August, up from 13.58% in July.

Meanwhile, inflation rose to 3.19% year-on-year in August from 2.88% in July, driven mainly by higher food prices, including chicken, bird's eye chilies and rice. BI expects inflation to remain within its 2.5% ± 1% target in 2026 and 2027.

Foreign exchange reserves stood at $146.5 billion at the end of August, equivalent to 5.4 months of imports.

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