Bank Indonesia (BI) kept its benchmark interest rate at 4.75% for the 4th consecutive meeting at its January 2026 policy meeting, in line with expectations, as it sought to limit further weakness in the rupiah despite signs of slowing economic growth. The rupiah weakened by 1.53% as of January 20, 2026, compared with the end of December 2025. The central bank has delivered cumulative cuts of 150 bps since September 2024, bringing the rate to its lowest level since October 2022 to support economic growth. The decision highlights BI’s view that inflation in 2026 will remain within its target range of 2.5% ± 1%, supported by a stable rupiah and ongoing measures to sustain economic growth. BI held its GDP growth forecasts at 4.7%–5.5% for 2025 and 4.9%–5.7% for 2026. It also maintained the overnight deposit facility rate and the lending facility rate unchanged at 3.75% and 5.50%, respectively. BI still has room to resume interest rate cuts, with inflation expected to stay low this year.
