Jakarta. Bank Indonesia (BI) left its benchmark interest rate unchanged at 5.75% on Wednesday after three consecutive rate hikes since May, while rolling out broader measures to attract foreign portfolio inflows, stabilize the rupiah, and deepen domestic financial markets.

The central bank also kept the Deposit Facility rate at 4.75% and the Lending Facility rate at 6.5%.

"The Bank Indonesia Board of Governors Meeting on July 21-22 decided to maintain the BI-Rate at 5.75%," Governor Perry Warjiyo said during a virtual press conference following the meeting.

BI said it would expand incentive schemes and other policy measures to boost foreign portfolio investment, strengthen the rupiah, accelerate money and foreign exchange market development, increase liquidity, and ease liquidity fragmentation in the banking system.

"The BI-Rate decision and these accompanying policy measures form an integrated policy mix aimed at further strengthening rupiah stability amid persistent global uncertainty, while keeping inflation within the target range in 2026 and 2027," Perry said.

The decision was widely expected by economists following the central bank's aggressive tightening cycle. BI raised the benchmark rate by 50 basis points to 5.25% in May, followed by a 25-basis-point increase to 5.5% at its June 9 weekly meeting and another 25-basis-point hike to 5.75% at its June policy meeting.

Permata Bank Chief Economist Josua Pardede said BI's decision to hold rates was appropriate, but stressed that the central bank should maintain a hawkish stance and remain ready to tighten further if pressure on the rupiah intensifies.

Rather than rushing into another rate hike, Josua said BI should preserve its credibility through firm communication, measured market intervention, and close coordination with the government.

"The government needs to provide stronger fiscal support, boost exports, secure food and energy supplies, and ensure policy certainty so that the burden of stabilizing the rupiah does not rest solely on BI's interest rate policy," Josua said.

The decision also matched the forecast of the University of Indonesia's Institute for Economic and Social Research (LPEM FEB UI). Economist Teuku Riefky noted that despite net foreign portfolio inflows of $700 million between June 15 and July 15, the rupiah still weakened 2.09% from Rp 17,690 to Rp 18,060 per US dollar. Meanwhile, Indonesia's foreign exchange reserves rose to $145.6 billion in June from $144.9 billion in May, their first monthly increase since January.

Riefky expects inflation to remain within BI's target despite rising risks from escalating Middle East tensions, but said further rate hikes would offer limited support for the rupiah while weighing on credit growth, investment, and domestic activity.

"We expect Bank Indonesia to keep the BI Rate unchanged while assessing the impact of recent policy tightening on the exchange rate, inflation, and domestic economic activity," Riefky said.

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