Bank Indonesia maintains BI Rate at 5.75% amid liquidity challenges

Bank Indonesia (BI) has decided to maintain its benchmark interest rate, the BI Rate, at 5.75%. While the benchmark remains unchanged, the central bank increased the Deposit Facility rate by 25 basis points to 5% to strengthen rupiah stability and manage external pressures.

This monetary decision coincides with liquidity challenges facing smaller banks (KBMI I), which have seen a year-on-year contraction of 8.14% in third-party funds (DPK) as of August 2026. To mitigate these pressures and support credit growth, BI is implementing a reduction in the net Statutory Reserve Requirement (GWM) by 1 percentage point through December 2026. This involves a 2 percentage point cut in the banking GWM combined with a 1 percentage point reduction in GWM incentives.

Additionally, BI is enhancing incentives for Domestic Non-Deliverable Forward (DNDF) hedging to attract foreign capital inflows. To assist banks facing funding gaps, BI will strengthen the role of primary dealer banks in money and foreign exchange markets to facilitate liquidity redistribution.