The Board of Governors Meeting (RDG) of Bank Indonesia, held on 17–18th June 2026, decided to raise the BI-Rate by 25 basis points to 5.75%, the Deposit Facility rate by 25 basis points to 4.75%, and the Lending Facility rate by 25 basis points to 6.50%. The rate hike represents a further measure to strengthen Rupiah exchange rate stabilisation amid persistently elevated global uncertainty, while also serving as a pre-emptive measure to ensure that inflation in 2026 and 2027 remains within the Government's target range of 2.5±1%. Meanwhile, macroprudential policy and payment system policy remain directed towards supporting growth (pro-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 remains directed 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 monetary, macroprudential, and payment system policy mix aimed in strengthening stability while supporting sustainable economic growth is also reinforced by the following policy measures:

1. Strengthening the effectiveness of monetary policy implementation to stabilise the Rupiah exchange rate and maintain inflation in 2026 and 2027 within the 2.5±1% target range by:
1. increasing the intensity of foreign exchange intervention to strengthen Rupiah exchange rate stabilisation 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. maintaining the interest rate structure of Bank Indonesia Rupiah Securities (SRBI) across the 6, 9 and 12-month tenors in line with the increase in BI-Rate to continue attracting foreign portfolio investment inflows to domestic financial assets;
3. continuing to provide incentives in the form of a 10% reduction in hedging swap rates for non-resident investors to further enhance the attractiveness of foreign investor inflows and compensate for the obligations currently borne by investors; and
4. maintaining adequate liquidity in the money market and banking industry by ensuring base money growth above 10% (double digit), consistent with monetary expansion, including through the reopening of the repurchase agreement (repo) auction window for the 3, 6, 9 and 12-month tenors as Bank Indonesia's main monetary liquidity expansion instrument for the banking industry.
2. Strengthening the effectiveness of macroprudential policy through:
1. an increase in the Bank Foreign Funding Ratio (RPLN) from a maximum of 35% to 40% of bank capital, effective from 1st July 2026. The increase in the RPLN ratio aims to expand banking funding sources, particularly from abroad, to support lending/financing to the economy, while ensuring compliance with prudential principles.
2. synergy with the Government and other stakeholders to encourage bank lending/financing through the Indonesian Intermediation Acceleration Program(PINISI); and
3. publication of the assessment of prime lending rate (PLR) transparency, with a focus on lending rates based on priority sectors in accordance with the scope of Macroprudential Liquidity Incentive Policy (KLM).
3. Strengthening the implementation of payment system digitalisation measures in accordance with the Indonesia Payment System Blueprint (BSPI) 2030 to support economic growth and further expand inclusive digital economic and financial activities by:
1. extending the current credit card policy and National Clearing System (SKNBI) tariff policy until 31st December 2026, including: minimum payment policy for credit cardholders of 5% of the total billed amount and late payment penalties of 1% of the outstanding balance up to a maximum of Rp100,000, and maintaining the SKNBI tariff from Bank Indonesia to banks at Rp1 and a maximum SKNBI tariff from banks to customers at Rp2,900; and
2. expanding digital financial acceptance through the QRIS Jelajah Indonesia 2026 program and Cross-Border QRIS expansion, as well as the continued implementation of the Indonesia Digital Innovation Center (PIDI), including the Digital Talent Empowerment and Innovation (Digdaya) and Hackathon programs, while strengthening synergy with the Government through the Capacity Building and Literacy Program for the Acceleration and Expansion of Regional Digitalisation (KATALIS P2DD) and Digdaya.
4. Strengthening money market and foreign exchange market deepening policy to be more advanced, efficient and prudent, thereby attracting foreign investment and bolstering monetary policy effectiveness, including Rupiah exchange rate stabilisation by:
1. expanding the money market and foreign exchange market ecosystem in terms of products, pricing, participants and infrastructure to support the use of Local Currency Transactions (LCT) with several countries to facilitate trade and investment;
2. strengthening prudential principles in the money market and foreign exchange market through a lower threshold for cash purchases of foreign exchange against the Rupiah without underlying transactions to USD10,000 per person per month, effective from 1st July 2026; and
3. strengthening prudential principles in the reporting of Foreign Exchange Traffic (LLD) through adjustments to the threshold for supporting document obligations on outgoing foreign currency transfers abroad from a nominal equivalent of above USD50,000 to above USD25,000, effective from 1st July 2026.
5. Expanding international cooperation with several central banks in central banking areas, including payment system connectivity and local currency transactions, while facilitating investment and trade promotion in priority sectors in cooperation with relevant institutions. In addition, Bank Indonesia continues to strengthen policy coordination with the Government, including close synergy between monetary and fiscal policy, to mitigate the impact of global uncertainty arising from the conflict in the Middle East on the domestic economy, thereby preserving economic stability and sustaining growth. Policy synergy with the Financial System Stability Committee (KSSK) is also strengthened to maintain financial system stability and support financing for the Government's Asta Cita programs.
   

GLOBAL AND DOMESTIC ECONOMIC DEVELOPMENTS

Global uncertainty stemming from the conflict in the Middle East remains high, despite easing slightly after the interim deal between the United States (US) and Iran on 14th June 2026. The conflict, which began to escalate in late February 2026, has disrupted production, distribution, and cross-border supply chains, while also lowering the global economic outlook and rising inflationary pressures. Several central banks have begun raising their policy rates in response to the increase in inflation. The Federal Funds Rate, is currently maintained at 3.50 - 3.75%, and may increase moving forward in line with the outlook for higher US inflation. US Treasury yields remained high, reaching 4.49% for the 10-year tenor and 4.18% for the 2-year tenor on 17th June 2026, driven by the widening fiscal deficit. US dollar indexes against advanced economy currencies (DXY) and emerging market currencies (ADXY) remain strong. Consequently, global investor preference for placements in emerging markets (EMs) remained weak, with a rebalancing towards safe-haven assets in advanced economies.

At home, economic growth in Indonesia remains sound, underpinned by domestic demand. Government consumption continues to record strong growth in line with the ongoing implementation of priority programs and accelerated government spending, particularly through the disbursement of the 13th-month salary for civil servants and the distribution of social assistance to beneficiary households. Household consumption remains well maintained, supported by the positive effects of accelerated government spending and sustained consumer confidence. Investment has also continued to improve, as reflected in the Purchasing Managers' Index (PMI), which remains in expansionary territory, primarily supported by building investment associated with Government projects. From the external side, exports need to be further strengthened to capitalise on high global commodity prices amid the slowing outlook for global economic growth.

Indonesia's Balance of Payments (BOP) performance must continue to be strengthened to support external resilience. The trade balance surplus narrowed to USD0.1 billion from a surplus of USD3.3 billion in March 2026. From the capital and financial account side, the various monetary policy responses implemented by Bank Indonesia, in synergy with fiscal policy measures to enhance the attractiveness of domestic financial instruments, have supported foreign capital inflows in the second quarter of 2026, which recorded net inflows of USD3.9 billion (as of 15th June 2026), after recording net capital outflows of USD0.8 billion in the first quarter of 2026. The foreign capital inflows were primarily supported by inflows into Bank Indonesia Rupiah Securities (SRBI) and Government Securities (SBN). Indonesia's foreign exchange reserves at the end of May 2026 remained strong at USD144.9 billion, equivalent to 5.6 months of imports or 5.5 months of imports and Government external debt servicing, and well above the international adequacy standard of approximately three months of imports.

The Rupiah exchange rate is appreciating, supported by Bank Indonesia's stabilisation policy response. The Rupiah exchange rate against the US dollar stood at Rp17,730 per US dollar on 17th June 2026, appreciating by 0.76% (ptp) compared with its level at the end of May 2026. This development was supported by Bank Indonesia's strengthened exchange rate stabilisation measures in response to elevated global uncertainty and domestic foreign exchange demand from corporations to support economic activities. In this regard, the intensity of foreign exchange intervention has been increased, both through intervention in offshore Non-Deliverable Forward (NDF) markets and through spot and Domestic Non-Deliverable Forward (DNDF) transactions in the domestic market. SRBI interest rates have been raised to attract foreign portfolio investment inflows and further strengthen Rupiah exchange rate stability. The outstanding position of Bank Indonesia Rupiah Securities (SRBI) reached Rp1,021.13 trillion as of 15th June 2026, with non-resident holdings increasing to Rp238.09 trillion (23.32% of total outstanding), thereby contributing to Rupiah exchange rate stability. Bank Indonesia also continues to provide incentive of a 10% reduction in hedging swap rates for non-resident investors to further enhance Indonesia's attractiveness as an investment destination and compensate for obligations currently borne by investors. In addition, Bank Indonesia has expanded its foreign exchange monetary operations instruments through offshore Chinese Renminbi (CNH)-Rupiah spot and swap transactions, in line with the broader utilisation of Local Currency Transactions (LCT) for the settlement of trade and investment transactions.

Consumer Price Index (CPI) inflation remained under control despite the increasing impact of global turmoil on domestic prices. CPI inflation in May 2026 was recorded at 3.08% (yoy), higher than the 2.42% (yoy) recorded in the previous month. This development was influenced by core inflation, which increased slightly to 2.59% (yoy) but remained under control, supported by Bank Indonesia's consistent policy in anchoring inflation expectations. Administered Prices (AP) inflation rose to 2.07% (yoy), reflecting adjustments in the prices of Liquefied Petroleum Gas (LPG), non-subsidised fuel and aviation turbine fuel, in line with higher global energy prices. Volatile food (VF) inflation also increased to 6.24% (yoy), influenced by lower supply resulting from weather-related production disruptions and the end of the main harvest season.

Liquidity in the money market, banking industry and economy remains adequate. To maintain sufficient liquidity in the money market and banking sector, Bank Indonesia has reopened repurchase agreement (repo) auction windows for 3, 6, 9 and 12-month tenors for banks to ensure adequate liquidity in the money market and banking industry. Bank Indonesia has also purchased Government Securities (SBN), amounting to Rp156.98 trillion in 2026 (up to 17th June 2026), including Rp76.62 trillion purchased in the secondary market. These developments have maintained strong double-digit growth in base money and supported adequate liquidity conditions in the economy. Base money (M0) grew by 14.8% (yoy) in May 2026, higher than the 14.1% (yoy) growth recorded in April 2026. In line with this development, broad money (M2) grew by 9.2% (yoy) in April 2026, following growth of 9.7% (yoy) in the previous month. In terms of contributing factors, M2 growth was primarily influenced by net claims on the Central Government and credit disbursement.

Accommodative macroprudential policy continues to be pursued through the optimisation of the Macroprudential Liquidity Incentive Policy (KLM) to encourage bank lending/financing to priority sectors. As of the first week of June 2026, KLM incentives received by banks amounted to Rp418.1 trillion, comprising Rp355.6 trillion allocated through the lending channel and Rp62.5 trillion through the interest rate channel. By bank group, KLM was distributed to state-owned banks (BUMN) amounting to Rp209.6 trillion, private national banks (BUSN) amounting to Rp169.9 trillion, regional development banks (BPD) amounting to Rp30.8 trillion, and foreign bank branches (KCBA) amounting to Rp7.8 trillion. By sector, KLM has been channelled to priority sectors, including agriculture, industry and downstreaming, services including the creative economy, construction, real estate and housing, as well as MSMEs, cooperatives, inclusion and sustainable sectors. Bank Indonesia will continue strengthening accommodative macroprudential policy implementation, including through enhancements to the Macroprudential Intermediation Ratio (RIM), Macroprudential Liquidity Incentive Policy (KLM), and Bank Foreign Funding Ratio (RPLN), to further support bank lending and financing.

Bank lending growth remained solid to support economic growth. Bank lending grew by 11.51% (yoy) in May 2026, higher than the 9.98% (yoy) growth recorded in April 2026. By type of use, this development was supported by investment credit, working capital credit and consumer credit, which in May 2026 grew by 21.95% (yoy), 8.09% (yoy) and 5.89% (yoy), respectively. Credit growth in 2026 remains within the range of 8–12% supported by the sizable amount of undisbursed loans, amounting to Rp2,576 trillion or 22.41% of the available credit ceiling, as well as adequate bank financing capacity, as reflected in the Liquid Assets-to-Third-Party Funds Ratio (LA/TPF) of 24.74% and strong growth in third-party funds of 13.47% (yoy) in May 2026. In addition, the movements of banking interest rates are expected to further support the credit outlook, with lending rates recorded at 8.72% and the one-month deposit rate at 4.26% in May 2026.

Banking sector resilience remains solid, thereby mitigating the risks from the conflict in the Middle East. This is reflected in adequate banking liquidity, strong capital levels, and low credit risk. The Capital Adequacy Ratio (CAR) of the banking industry remained high at 23.97% in April 2026, indicating a strong capacity to absorb risks and support lending growth. Aggregate Non-Performing Loans (NPL) remained low at 2.17% (gross) and 0.84% (net) in April 2026. Bank Indonesia's stress test results indicate that banking resilience remains strong in the face of various risks, including spillover effects from the prolonged conflict in the Middle East, supported by well-maintained corporate repayment capacity and profitability. Bank Indonesia continues strengthening macroprudential policy and policy synergy with the Financial System Stability Committee (KSSK) in order to help maintain financial system stability.

The growth of digital economic and financial transactions remained high in May 2026, supported by secure, seamless and reliable payment systems. The volume of digital payment transactions^[1] reached 5.22 billion transactions, growing by 28.14% (yoy) in May 2026, supported by the continued expansion of digital payment acceptance. Transaction volumes through mobile and internet applications grew by 26.16% (yoy) and 15.51% (yoy), respectively, including QRIS transactions, which continued to record robust growth of 95.10% (yoy). This positive performance was supported by an increase in the number of users and merchants. From the infrastructure perspective, retail transaction volumes processed through BI-FAST reached 518 million transactions, growing by 31.63% (yoy), with transaction values amounting to Rp1,265 trillion in May 2026. Meanwhile, large-value transaction volumes processed through BI-RTGS totalled 0.78 million transactions, growing by 1.98% (yoy), while BI-RTGS transaction values increased by 8.08% (yoy) to Rp15,618 trillion in May 2026. In terms of Rupiah currency management, Currency in Circulation (UYD) grew by 15.80% (yoy) to Rp1,324 trillion in May 2026.

Payment system stability was preserved, supported by stable infrastructure and a sound industry structure. Stable infrastructure is reflected in the smooth and reliable operation of the Bank Indonesia Payment System (SPBI) and industry payment systems, as well as the adequacy of currency supply in sufficient quantity and quality. A sound industry structure is reflected in the strengthening interconnections among participants in the payment system, accompanied by the expansion of the Digital Economy and Finance (EKD) ecosystem. Bank Indonesia will continue to strengthen the payment system industry structure, particularly in terms of risk management and the reliability of industry participants' technological infrastructure, in line with the implementation of Bank Indonesia Regulation No. 10 of 2025 concerning Payment System Industry Regulation (PBI PISP). Bank Indonesia will also continue to ensure the security and reliability of SPBI infrastructure, both retail and wholesale, as well as industry payment system infrastructure. In addition, Bank Indonesia will continue to ensure the availability of Rupiah currency in sufficient quantity and fit-for-circulation quality throughout the territory of the Unitary State of the Republic of Indonesia    (NKRI), including frontier, outermost, and remote   (3T) regions.

ECONOMIC PROSPECTS

Global economic growth in 2026 is projected to remain low at 3.0%, accompanied by a build-up of inflationary pressures to around 4.4%. Moving forward, ongoing negotiations between the US and Iran concerning an agreement to resolve the conflict in the Middle East are expected to remain dynamic, demanding vigilance as well as stronger fiscal and monetary policy responses and synergy to strengthen external resilience, maintain stability and drive domestic economic growth.

At home, the prospect of Indonesia's economic growth in 2026 is projected to remain within the range of 4.9–5.7%. Going forward, various Government stimulus programs aimed at maintaining household purchasing power, together with the implementation of priority programs, will continue to be optimised to strengthen domestic demand as a source of economic growth. In line with those efforts, Bank Indonesia continues to optimise its policy mix to strengthen stability while supporting sustainable economic growth, including through accommodative macroprudential policy and payment system policy to support digital economic activity and inclusive finance.

Indonesia's Balance of Payments (BOP) performance must continue to be strengthened to support external resilience. Bank Indonesia projects the current account balance in 2026 to remain healthy, with a deficit in the range of 1.3% to 0.5% of GDP. Therefore, policy synergy between the Government and Bank Indonesia will continue to be strengthened to strengthen the capital and financial account, thereby supporting external resilience and strengthening Rupiah exchange rate stability amid global volatility.

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 in 2026 and 2027 is projected to remain within the range of 2.5±1%, although the impact of rising global commodity prices needs to be anticipated. In this regard, Bank Indonesia will continue to strengthen its monetary policy mix response, including Rupiah exchange rate stabilisation measures, to mitigate rising imported inflation pressures and ensure that inflation remains within the 2.5±1% target range in 2026 and 2027. Bank Indonesia also continues to strengthen synergy with the Government through the Central and Regional Inflation Control Teams (TPIP and TPID) by reinforcing the implementation of the Inflation Control and Food Security Movement (GPIPS), including efforts to anticipate the impact of weather-related risks, particularly El Niño, on food prices.

Bank Indonesia projects credit growth in 2026 to remain within the range of 8–12%. The outlook is supported by the still sizable amount of undisbursed loans, as well as adequate bank financing capacity, as reflected in the Liquid Assets-to-Third-Party Funds Ratio (LA/TPF) and strong growth in third-party funds. In addition, developments in banking interest rates are expected to further support the credit outlook. Going forward, Bank Indonesia will continue strengthening Macroprudential Liquidity Incentive Policy (KLM) by providing incentives for banks that increase non-credit financing and non-deposit funding, as well as for banks that set lending and financing rates in line with Bank Indonesia policy.