No. 28/13/DKom

The Bank Indonesia Board of Governors decided on 20^th-21^st January 2026 to hold the BI-Rate at 4.75%, while also maintaining the Deposit Facility (DF) rate at 3.75% and the Lending Facility (LF) rate at 5.50%. The decision is consistent with the current policy focus on efforts to maintain Rupiah exchange rate stability against a backdrop of increasing global uncertainty to achieve the inflation target in 2026-2027 and foster economic growth. Moving forward, Bank Indonesia will continue strengthening the effectiveness of existing accommodative monetary and macroprudential policies, while considering room for further BI-Rate reductions with manageable inflation forecast in 2026-2027 within the 2.5%±1% target corridor, thereby supporting higher economic growth. Bank Indonesia will maintain the pro-growth stance of macroprudential policy, which includes enhancing the effectiveness of Macroprudential Liquidity Incentive Policy (KLM) to accelerate lower interest rates and nurture lending/financing to the real sector, particularly to government's priority sectors. Payment system policy remains oriented towards supporting inclusive economic growth by expanding the acceptance of digital payments, while strengthening the structure of the payment system industry and the resilience of payment system infrastructure.

The stance of the monetary, macroprudential, and payment system policy mix to maintain stability, while bolstering sustainable economic growth, is supported by the following policy measures:

1. Strengthening the Rupiah exchange rate stabilisation strategy through intervention, both in offshore non-deliverable forward (NDF) transactions and in domestic markets through spot and domestic non-deliverable forward (DNDF) transactions. This strategy is complemented by the purchase of government securities (SBN) in the secondary market.
2. Strengthening the pro-market monetary operations strategy to bolster the Rupiah exchange rate stabilisation strategy and strengthen effective monetary policy transmission to maintain stability and stimulate economic growth by:
1. managing the interest rate structure of monetary instruments,
2. optimising issuances of Bank Indonesia Rupiah Securities (SRBI), and
3. strengthening the attractiveness of government securities (SBN) yields through measured secondary market transactions.
3. Strengthening the effectiveness of accommodative macroprudential policies in encouraging lending/financing and reducing interest rates in the banking industry, underpinned by strengthening the assessment of prime lending rate (PLR) transparency with a focus on interest rates based on priority sectors in accordance with the scope of KLM policy, including the PLR response to changes in the policy rate (Appendix 1).
4. Strengthening the digital acceptance strategy through Indonesia-China QRIS Cross-Border and Indonesia-South Korea QRIS Cross-Border cooperation in the first quarter of 2026.
5. Strengthening and expanding international cooperation among central banks, including payment system connectivity and Local Currency Transactions (LCT), while promoting trade and investment in priority sectors in synergy with relevant institutions.
   

Bank Indonesia is strengthening policy synergy with the Financial System Stability Committee (KSSK) to maintain financial system stability and foster economic growth in line with the Government's Asta Cita program.

The global economy continues tracking a slowing trend, accompanied by increasing uncertainty. Slightly lower global economic growth is projected in 2026 at 3.2% relative to the 3.3% realised in 2025. Slower growth primarily stems from the knock-on effect of reciprocal tariffs introduced by the United States (US) and global supply chain fragilities, despite economic prospects in the US improving given technology sector investment, including artificial intelligence (AI), and fiscal stimuli in the form of tax breaks. Economic moderation is projected in Japan, China, and India in 2026 due to softer domestic demand and exports, amid increasing investment in AI. In the global financial markets, room for further Federal Funds Rate (FFR) cuts has decreased, accompanied by persistently high US Treasury (UST) yields in line with the massive US fiscal deficit. Global financial market uncertainty was also triggered by US reciprocal tariffs and escalating geopolitical tensions. Such developments have strengthened the US dollar against currencies in other advanced economies (DXY) and limited capital flows to emerging markets (EM). Such conditions demand vigilance and a keen policy response to strengthen domestic economic resilience against global spillovers and to accelerate growth.

At home, economic growth in Indonesia remains favourable and requires continuous strengthening to align with economic capacity. Economic growth in the fourth quarter of 2025 is projected to accelerate on the back of stronger domestic demand in response to improving consumer confidence and increasing fiscal stimuli. By sector, the major economic sectors, namely the manufacturing industry, wholesale and retail trade, as well as information and communication, maintained positive performance. Regionally, Bali-Nusa Tenggara (Balinusra) recorded the strongest economic growth, followed by Java and Kalimantan, powered by increasing domestic demand. Overall, economic growth in 2025 is forecast in the 4.7-5.5% range. In 2026, economic growth is projected to accelerate in the 4.9-5.7% range, supported by stronger domestic demand in line with various government policies and the ongoing positive impact of Bank Indonesia's pro-growth policy mix. The effectiveness of various government stimulus programs in 2026 must be strengthened to drive household consumption and labour absorption. Investment is also anticipated to gain momentum, supported by ongoing government priority programs, including the downstreaming of natural resources, which is expected to increase economic capacity and productivity. To that end, Bank Indonesia will continue strengthening its policy mix by optimising the monetary, macroprudential, and payment system policy mix in close synergy with the fiscal stimuli and real sector policies to support higher and more resilient national economic growth.

Indonesia's Balance of Payments (BOP) must be strengthened against increasing global uncertainty. In the fourth quarter of 2025, the BOP is projected to remain solid, supported by a positive trade balance, which in November 2025 amassed a USD2.7 billion surplus, underpinned by non-oil and gas exports of natural resources, such as precious metals and jewellery/gems, nickel and articles thereof, as well as mineral fuel. Meanwhile, capital flows in the fourth quarter of 2025 recorded net inflows, primarily supported by a significant increase observed in December 2025 due to global bond issuances, after recording low net inflows in October and November 2025 in line with persistently high global uncertainty. Consequently, BOP performance in 2025 is expected to remain resilient, accompanied by a healthy current account in the range of a 0.5% of GDP deficit to a 0.3% of GDP surplus. The position of foreign reserves at the end of December 2025 increased to USD156.5 billion, equivalent to 6.4 months of imports or 6.3 months of imports and the servicing of government external debt, which is well above the international adequacy standard of around 3 months of imports. Moving forward, BOP performance in 2026 is forecast to remain solid, accompanied by a narrow current account deficit of 0.9-0.1% of GDP. In terms of the capital and financial account (CFA), elevated global financial uncertainty triggered foreign capital outflows of portfolio investment, thus recording net outflows totalling USD1.6 billion as of 19^th January 2026. This requires a strong policy response to maintain external resilience in Indonesia.

Bank Indonesia's exchange rate policy is constantly strengthened to maintain Rupiah exchange rate stability against the impact of increasing global uncertainty. The value of the Rupiah on 20^th January 2026 stood at Rp16,945 per US dollar, depreciating 1.53% (ptp) relative to the level recorded at the end of December 2025. Foreign capital outflows contributed to Rupiah depreciation, spurred by increasing global financial market uncertainty. In addition, domestic corporate and bank demand for foreign currencies increased in line with economic activity, which also impacted Rupiah performance. Maintaining Rupiah exchange rate stability, Bank Indonesia has taken intensive stabilisation measures through intervention in offshore NDF markets as well as onshore DNDF and spot markets. This policy response has effectively reined in exchange rate volatility and is consistent with efforts to achieve the inflation target of 2.5%±1% in 2026. Moving forward, Bank Indonesia remains firmly committed to maintaining Rupiah exchange rate stability, including measured intervention in offshore NDF markets as well as domestic spot and DNDF markets, while strengthening the pro-market monetary operations strategy. Bank Indonesia expects the Rupiah to remain stable and appreciate, underpinned by attractive yields, low inflation and the positive economic growth outlook for Indonesia.

Consumer Price Index (CPI) inflation in 2025 was maintained within the 2.5%±1% target corridor, with CPI inflation in December 2025 recorded at 2.92% (yoy). Low core inflation was maintained at 2.38% (yoy) in line with economic growth that remains below capacity, monetary policy consistency by Bank Indonesia to anchor inflation expectations to the target corridor, as well as low imported inflation. Administered prices (AP) also remained low at 1.93% (yoy). In contrast, volatile food (VF) inflation was relatively high at 6.21% (yoy), primarily stemming from shallots as the main contributors due to supply disruptions caused by inclement weather and rising seed prices. Moving forward, Bank Indonesia is confident inflation in 2026 and 2027 will remain low and within the 2.5%±1% target range. Low core inflation is projected in line with anchored inflation expectations, adequate economic capacity, managed imported inflation, as well as the positive impact of digitalisation. Bank Indonesia also expects VF inflation to remain manageable, supported by inflation control synergy between Bank Indonesia and the Central and Regional Government Inflation Control Teams (TPIP/TPID), while strengthening implementation of the National Food Security Program.

Bank Indonesia continues strengthening its monetary policy to accelerate economic growth, while maintaining economic stability. Monetary policy includes BI-Rate reductions, Rupiah exchange rate stabilisation and monetary liquidity expansion. Since September 2024, Bank Indonesia has reduced the BI-Rate by 150 bps, namely by 25 bps in September 2024 and 125 bps in 2025 to 4.75% as of December 2025, the lowest level since 2022. In addition, Bank Indonesia is strengthening its Rupiah stabilisation policy through measured intervention in offshore NDF markets and in domestic markets through spot and DNDF transactions, while also purchasing SBN in the secondary market. Bank Indonesia is also expanding Rupiah liquidity by lowering the position of SRBI monetary instruments from Rp916.97 trillion at the beginning of 2025 to Rp730.90 trillion at the end of 2025 and Rp694.04 trillion as of 20^th January 2026. Through close monetary and fiscal policy synergy, Bank Indonesia has also purchased SBN amounting to Rp23.69 trillion in 2026 (as of 20^th January 2026), including SBN purchased in the secondary market totalling Rp13.21 trillion. Bank Indonesia is undertaking measured and transparent SBN purchases in the secondary market in line with market mechanisms, which is consistent with monetary programs to maintain economic stability, thereby strengthening monetary policy credibility.

Bank Indonesia is strengthening macroprudential liquidity incentive policies (KLM) and accelerating payment system digitalisation to further bolster economic growth.  The strengthening of KLM policy, implemented on 16^th December 2025, was oriented towards accelerating the lowering of bank lending rates by increasing the incentives for banks that reduce interest rates on new loans with a shorter lag in line with the BI-Rate. As of the first week of January 2026, Bank Indonesia disbursed KLM incentives totalling Rp397.9 trillion, with Rp182.9 trillion allocated to state-owned banks, Rp174.7 trillion to national private commercial banks, Rp33.1 trillion to regional government banks and Rp7.2 trillion to foreign bank branches. By sector, the incentives were primarily disbursed to priority sectors, namely agriculture, manufacturing, and downstream sectors; services, including the creative economy, construction, real estate and housing, as well as the MSME, cooperatives, inclusive, and green sectors.

The transmission of monetary policy easing needs to be strengthened continuously. The accommodative monetary policy stance maintained by Bank Indonesia and accumulated budget surplus placed by the Government in the banking industry must be followed by measures in the banking industry faster lower interest rates with a shorter lag. In the money market, consistent with the BI-Rate reductions totalling 125 bps in 2025 and the monetary liquidity expansion policy instituted by Bank Indonesia, the INDONIA money market reference rate also trended downwards by 234 bps from the beginning of 2025 to 3.69% as of 20^th January 2026. Meanwhile, SRBI rates for tenors of 6, 9, and 12 months also tracked downward trends, namely by 254 bps, 254 bps, and 258 bps since the beginning of 2025 to 4.62%, 4.66%, and 4.69% on 15^th January 2026. SBN yields on tenors of 2 and 10 years were recorded at 5.06% and 6.31% on 20^th January 2026, respectively. Transmission of the lower BI-Rate to interest rates in the banking industry continues, both in terms of deposit rates and lending rates. The 1-month term deposit rate has fallen by 56 bps from 4.81% at the beginning of 2025 to 4.25% in December 2025, yet further efforts are required to reduce the availability of special rates to large depositors. Alongside lower deposit rates, lending rates in the banking industry are showing early signs of decreasing, namely by falling 39 bps from 9.20% at the beginning of 2025 to 8.81% in December 2025. Going forward, efforts to reduce banks' funding costs and lending rates need to be further strengthened to encourage higher credit growth in support of sustainable economic growth.

Total money supply increased in line with BI policy to strengthen the effectiveness of monetary liquidity expansion in pursuit of economic growth. In December 2025, growth of base money (M0) accelerated significantly to 11.4% (yoy) from 6.5% (yoy) one month earlier. In fact, growth of adjusted base money (adjusted M0), namely base money that has neutralised the impact of KLM policy, was even higher at 16.8% (yoy), up from 13.33% (yoy) in the previous period. By component, the higher growth of M0 was influenced by an increase in currency in circulation and bank deposits at Bank Indonesia, in line with the strengthening of economic activity. In terms of contributing factors, the higher M0 growth was driven by fiscal and monetary coordination, in line with central bank liquidity expansion and government fiscal stimuli toward the end of the year. Meanwhile, growth of broad money (M2) increased to 8.3% (yoy) in November 2025 from 7.7% (yoy) in October 2025. Based on the affecting factors, higher M2 growth was primarily driven by net claims on central government (NCG) and disbursed loans. Moving forward, money supply growth must be monitored and managed through policy synergy between Bank Indonesia and the Government to support economic growth.

Loans disbursed by the banking industry in 2025 recorded 9.69% (yoy) growth, which is consistent with the projection by Bank Indonesia of 8-11% (yoy). By loan type, growth of investment loans, working capital loans, and consumer loans in 2025 was recorded 21.06% (yoy), 4.52% (yoy), and 6.58% (yoy). This was consistent with BI efforts to lower interest rates and strengthen Macroprudential Liquidity Incentive Policy (KLM), as well as the realisation of government priority programs amid maintained macro-financial conditions. On the demand side, business expansion must be encouraged using undisbursed loans, which remained significant in December 2025 at Rp2,439.2 trillion or 22.12% of the loans available. On the supply side, adequate bank financing capacity is supported by a ratio of liquid assets to third-party funds (LA/TPF) at 28.57% and high deposit growth of 13.83% (yoy) in December 2025. In addition, bank appetite to lend remains healthy, as reflected by looser lending requirements, excluding consumer loans and MSME loans due to persistently high credit risk affecting both segments. Overall, Bank Indonesia projects growth of loans disbursed by the banking industry in 2026 in the 8-12% range. Moving forward, Bank Indonesia will continue strengthening coordination with the Government and KSSK Committee to revive bank lending/financing and improve the interest rate structure.

Financial system resilience remains solid, underpinned by ample bank liquidity, high capital and low credit risk. The Capital Adequacy Ratio (CAR) in November 2025 remained high at 26.05%, which was adequate to absorb risk. As an aggregate, non-performing loans (NPL) remained low in the banking industry at 2.21% (gross) and 0.86% (net) in November 2025. The latest BI stress tests indicate solid banking industry resilience in the face of various risk scenarios, supported by maintained corporate repayment capacity and profitability. Bank Indonesia will continue strengthening policy synergy with the KSSK Committee to mitigate various risks that could potentially disrupt financial system stability.

Digital economic and financial transactions maintained high growth in the fourth quarter of 2025, supported by secure, seamless and reliable payment systems. The volume of digital payments^[1] in the fourth quarter of 2025 grew 39.21% (yoy) to reach 14.26 billion transactions, supported by broader acceptance of digital payments. Transaction volume through mobile and internet banking applications grew 12.10% (yoy) and 15.10% (yoy), respectively, including digital payment transaction volume through QRIS, which continued enjoying robust growth of  139.99% (yoy), underpinned by increasing numbers of users and merchants. From an infrastructure perspective, the volume of retail transactions processed through BI-FAST grew 30.44% (yoy) to reach 1,358.65 million transactions, with a value of Rp3,442.26 trillion in the fourth quarter of 2025. On the wholesale or high-value side, the BI-RTGS system processed 2.88 million transactions in the fourth quarter of 2025, up 3.82% (yoy), with a transaction value of Rp65,069.78 trillion. In terms of Rupiah currency management, total currency in circulation grew 12.90% (yoy) to Rp1,359.94 trillion in the fourth quarter of 2025.

Payment system stability has been maintained, supported by stable infrastructure and a sound industry structure. Stable infrastructure is reflected in the seamless and reliable payment systems maintained by Bank Indonesia, along with an adequate money supply of currency fit for circulation in appropriate denominations in the fourth quarter of 2025. A healthy payments industry structure is reflected by increasing payment system interconnection, accompanied by the continued expansion of the digital economy and finance ecosystem. Payment transactions based on the National Open API Payment Standard (SNAP) continue to grow and strengthen interconnection as SNAP adoption expands. Meanwhile, Bank Indonesia will continue ensuring the availability, reliability and security of the retail and wholesale payment systems operated by Bank Indonesia and the industry. In addition, Bank Indonesia will continue strengthening the structure of the payment system industry with a focus on risk management and the reliability of infrastructure technology among industry players in accordance with the implementation of Bank Indonesia Regulation (PBI) Number 10 of 2025 concerning the Payment System Industry Regulation (PBI PISP). Furthermore, Bank Indonesia will consistently safeguard the adequate availability of Rupiah currency fit for circulation in suitable amounts throughout all regions of the Republic of Indonesia, particularly in frontier, outermost and remote regions, and to fulfil seasonal demand during national religious holidays (HBKN).

Jakarta, 21^st January 2026
Communication Department
Ramdan Denny Prakoso
Executive Director

^[1] Digital payments include transactions through mobile applications and the internet.