The Bank Indonesia Board of Governors Meeting on 18–19 August 2026 decided to hold the BI-Rate at 5.75%, the Deposit Facility rate at 4.75%, and the Lending Facility rate at 6.50%. This decision remains consistent with efforts to strengthen Rupiah exchange rate stability against the impact of heightened global volatility stemming from the conflict in the Middle East, maintain inflation within the 2.5±1% target range in 2026 and 2027, and support sustainable economic growth. Bank Indonesia also continues to expand its incentive policies and other policy measures to attract foreign capital inflows and strengthen Rupiah exchange rate stability, increase liquidity and reduce liquidity segmentation in the money market and banking industry, as well as accelerate money and foreign exchange market deepening. Meanwhile, macroprudential and payment system policies remain geared towards supporting economic growth. Bank Indonesia continues strengthening accommodative macroprudential policy to support economic growth by increasing lending/financing to the real sector, while maintaining financial system stability. Payment system policy also remains oriented towards supporting economic activity through broader acceptance of digital payments, strengthening the payment system industry structure, as well as enhancing the reliability and resilience of payment system infrastructure.

The direction of the monetary, macroprudential and payment system policy mix to strengthen stability, while supporting sustainable economic growth, is further bolstered through the following policy measures:

1. Strengthening the effectiveness of monetary policy implementation to stabilise the Rupiah exchange rate and maintain inflation within the 2.5±1% target range in 2026 and 2027, through:
   1. optimising the foreign exchange intervention strategy to strengthen Rupiah exchange rate stability through Non-Deliverable Forward (NDF) transactions in offshore markets, as well as spot and Domestic Non-Deliverable Forward (DNDF) transactions in the domestic market; 
   2. managing the interest rate structure in the money market in line with the BI-Rate and rates of pro-market monetary operations instruments, accompanied by the strengthened pro-market monetary operations strategy; 
   3. maintaining adequate liquidity in the money market and banking system by ensuring double-digit growth in base money, in line with monetary expansion;
      
2. Strengthening the effectiveness of Rupiah exchange rate stabilisation and maintaining adequate Rupiah liquidity by expanding the scope of underlying transactions of foreign funding eligible for a 12.5%^[1], premium reduction incentive on sell hedging swaps (buy hedging swaps with Bank Indonesia), from previously covering only portfolio inflow transactions to also include banks' external borrowings and foreign direct investment (FDI). Such hedging swap transactions have a maximum tenor of 12 (twelve) months, with a maximum contract period of 3 (three) years, and may be rolled over in accordance with the remaining tenor of the hedging contract. The expanded scope of eligible underlying transactions for hedging swaps will take effect in the second week of September 2026 for external borrowings and foreign direct investment (FDI) funds received from 1^st July 2026 onwards;
3. Strengthening preparations for the implementation of the following Macroprudential Policies:
   1. the Macroprudential Liquidity Incentive Policy for money market deepening to maintain adequate liquidity and promote liquidity redistribution, while continuing to support credit and financing to priority sectors, which will take effect on 1 September 2026; 
   2. the Macroprudential Inclusive Financing Ratio (RPIM) policy to promote bank lending and financing to inclusive and sustainable sectors, which will take effect on 1 October 2026;​
4. Strengthening the implementation of payment system digitalisation measures in line with the Indonesia Payment System Blueprint (BSPI) 2030 to support economic growth, expand digital economic activity, and advance financial inclusion, through:
   1. promoting the implementation of the Indonesia Credit Card (KKI), launched on 17th August 2026, and strengthening industry readiness for the expansion of the 0% QRIS Merchant Discount Rate (MDR) policy to transactions of up to Rp100,000, effective from 1^st October 2026; 
   2. organising the 2026 Indonesia Digital Economy and Finance Festival in collaboration with the Indonesia Fintech Summit & Expo (FEKDI x IFSE) on 24–26th September 2026, in synergy with the Coordinating Ministry for Economic Affairs, the Financial Services Authority (OJK), and the financial industry;
      

The global economic outlook remains subdued amid persistently high financial market uncertainty. Such conditions are influenced by the continued intensity of the conflict in the Middle East, which has renewed upward pressures on oil and other international commodity prices. These developments have continued to weigh on global economic growth. Meanwhile, global inflationary pressures remained elevated, prompting tighter global monetary policy, including the US monetary policy rate, the Federal Funds Rate (FFR). US Treasury yields have also increased. The uncertainty in global financial markets has endured, undermining global investor preference for portfolio investment in emerging markets and sustaining the strong US dollar against advanced economy currencies (DXY) and emerging market currencies (ADXY). 

Indonesia's economic growth remains resilient and needs to be further supported to strengthen growth momentum. Indonesia's economy grew 5.29% (yoy) in the second quarter of 2026, following 5.61% (yoy) growth in the previous period. Growth was largely supported by fiscal stimulus, which boosted government consumption and investment. Government consumption continued to grow strongly, driven by higher personnel expenditure, including the disbursement of the 13^th month salary, as well as goods and services spending related to the Free Nutritious Meals (MBG) Program. Meanwhile, household consumption remained solid, although further improvements are required to capitalise on strong fiscal stimulus momentum. Export performance must also be strengthened further to reinforce the structure of economic growth.

The performance of Indonesia's Balance of Payments (BOP) must continue to be strengthened to support external resilience. Indonesia's trade balance recorded a cumulative surplus of USD3.58 billion from January to June 2026, despite posting a USD0.45 billion deficit in June 2026. In terms of the capital and financial account, foreign portfolio investment in the third quarter of 2026 (as of 14^th August 2026) recorded net inflows of USD1.8 billion, supported by government issuances of global bonds as well as inflows to Government Securities (SBN) and Bank Indonesia Rupiah Securities (SRBI). The position of Indonesia's international reserves remained high at USD145.3 billion at the end of July 2026, equivalent to 5.5 months of imports or 5.3 months of imports and servicing government external debt, which is well above the international adequacy standard of approximately 3 months of imports.

The Rupiah exchange rate strengthened, underpinned by Bank Indonesia's stabilisation policy response. The Rupiah appreciated to Rp17,855 per US dollar on 18^th August 2026, regaining 0.78% (ptp) compared with the level at the end of July 2026. Such developments were supported by Bank Indonesia's comprehensive strategy to optimise the full range of monetary instruments and expand policy incentives to attract foreign portfolio inflows and strengthen Rupiah exchange rate stability, while accelerating money market and foreign exchange market deepening. Bank Indonesia increased the incentive for Swap Sell Hedging to 12.5%, while a 15% incentive is also provided for DNDF Hedging Sell transactions. Bank Indonesia also announced incentives to increase Local Currency Transactions (LCT) with partner countries through a 10% premium for Swap Buy Hedging and a 10% premium reduction for DNDF Hedging Sell transactions. Bank Indonesia will continue pursuing various strategies to maintain Rupiah exchange rate stability.

Consumer Price Index (CPI) inflation remains within the target range. CPI inflation in July 2026 was recorded at 2.88% (yoy), down from 3.34% (yoy) in the previous period. Such developments were supported by contained core inflation of 2.76% (yoy) in response to policy consistency at Bank Indonesia. Administered prices (AP) inflation was recorded at 3.58% (yoy) following adjustments to non-subsidised Pertamax fuel prices. Meanwhile, volatile food (VF) inflation moderated to 2.52% (yoy), supported by harvests of various chilli varieties and shallots. Bank Indonesia also continues strengthening synergy with the Government through the Central and Regional Inflation Control Teams (TPIP/TPID) in implementing the Inflation Control and Food Prosperity Movement (GPIPS) to control food inflation, including measures to anticipate the weather-related risks associated with El Niño to food prices.

Bank Indonesia continues strengthening policies to maintain adequate liquidity in the money market, banking industry and economy, consistent with achieving the inflation target. Base money (M0) growth remained at a high rate of 18.3% (yoy) in July 2026, supported by various measures taken by Bank Indonesia to maintain adequate liquidity. By component, M0 growth in July 2026 was primarily influenced by commercial bank demand deposits at Bank Indonesia, which grew by 22.4% (yoy), and currency in circulation, which grew by 15.1% (yoy). Based on the affecting factors, M0 growth in July 2026 was influenced by Bank Indonesia monetary operations and fiscal expansion by the Government. Accordingly, broad money (M2) grew by 8.7% (yoy) in June 2026. In terms of the affecting factors, M2 growth was primarily driven by disbursed loans and Net Claims on Central Government (NCG).

Banking intermediation continues to increase, supported by maintained banking system resilience. Bank lending grew by 13.58% (yoy) in July 2026, up from 12.67% (yoy) in June 2026. Such positive developments were supported by the accommodative macroprudential policy stance maintained through optimisation of the Macroprudential Liquidity Incentive Policy (KLM) to boost bank lending/financing to priority sectors. As of the first week of August 2026, KLM incentives received by banks amounted to Rp446.5 trillion, comprising Rp368.4 trillion allocated through the financing channel, Rp73.2 trillion through the interest rate channel and Rp4.9 trillion through the financing-to-funding channel. Banking resilience also remained solid and supported credit growth, with the Capital Adequacy Ratio (CAR) of the banking industry recorded high at 23.70% in June 2026. As an aggregate, Non-Performing Loan (NPL) ratios in the banking industry remained low at 2.09% (gross) and 0.82% (net) in June 2026. Meanwhile, the Liquid Assets to Third-Party Funds (LA/TPF) ratio remained stable at 23.10% in July 2026.

Digital economic and financial transactions continued to grow in July 2026, supported by secure, seamless and reliable payment systems as well as stable infrastructure and a sound industry structure. Digital payment^[2] transaction volume reached 5.50 billion transactions in July 2026, growing by 28.69% (yoy), supported by broader acceptance of digital payments. Transaction volumes through internet and mobile applications grew by 9.39% (yoy) and 24.25% (yoy), respectively, including QRIS transactions, which continued to enjoy robust growth of 82.42% (yoy), supported by increasing numbers of users and merchants. On the infrastructure side, retail transaction volumes processed through BI-FAST reached 546 million transactions, growing by 31.62% (yoy), with a transaction value of Rp1,355 trillion. Meanwhile, the volume of large-value (wholesale) transactions processed through BI-RTGS was recorded at 0.99 million transactions, growing 3.12% (yoy), with BI-RTGS transaction value growing by 1.54% (yoy) to Rp20,097 trillion. In terms of Rupiah currency management, Currency in Circulation (CiC) grew by 15.10% (yoy) to Rp1,314 trillion. Bank Indonesia also continues maintaining the availability of Rupiah currency in sufficient quantities and fit for circulation throughout the territory of the Republic of Indonesia, including frontier, outermost and remote (3T) areas.  

The prospect of global economic growth in 2026 remains subdued and is projected at around 3.0%, meanwhile, the global inflationary pressures persist at around 4.5% in 2026. The US monetary policy rate, the Federal Funds Rate (FFR) is expected to increase in the fourth quarter of 2026. US Treasury yields have also increased and are projected to remain high in line with stronger expectations of an FFR hike and the persistently wide US fiscal deficit.

At home, economic growth in 2026 is projected within the 4.9–5.7% range. Economic growth is projected to remain solid, supported by implementation of various government stimulus programs and well-maintained confidence among economic agents. Bank Indonesia continues strengthening its policy mix through monetary, macroprudential and payment system policies, working in close synergy with government policies to maintain stability in pursuit of economic growth.

The performance of Indonesia's Balance of Payments (BOP) must continue to be strengthened to support external resilience. Bank Indonesia projects external resilience to remain solid, supported by policy synergy between the Government and Bank Indonesia in response to global shocks. The Rupiah exchange rate is projected to remain stable, supported by a strengthened Bank Indonesia stabilisation policy response.

Bank Indonesia will continue to strengthen various policy responses to maintain the stability of the Rupiah exchange rate. Bank Indonesia remains confident that the Rupiah will remain stable and trend towards appreciation, supported by Bank Indonesia's strong commitment, attractive yields and Indonesia's favourable economic growth prospects.

CPI inflation prospects is projected to remain within the target. Moving forward, Bank Indonesia will continue strengthening its monetary policy mix response to maintain inflation within the 2.5±1% target range in 2026 and 2027, including Rupiah exchange rate stabilisation efforts to mitigate the impact of global spillovers on imported inflation. Bank Indonesia also continues strengthening synergy with the Government through the Central and Regional Inflation Control Teams (TPIP/TPID) in implementing the Inflation Control and Food Prosperity Movement (GPIPS) to control food inflation, including measures to anticipate the weather-related risks associated with El Niño to food prices.

Bank Indonesia continues strengthening policies to maintain adequate liquidity in the money market, banking industry and economy, consistent with achieving the inflation target. Moving forward, Bank Indonesia will continue strengthening various measures to maintain adequate liquidity in the money market, banking industry and economy, thereby preserving stability and supporting economic growth.

^[1]  Initially, applicable to USD and RMB (CNY and CNH).

^[2] Digital payments include transactions through mobile applications and the internet.

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