Bank Indonesia lifts benchmark rate to 5.75%, sparking market rally and business response

Bank Indonesia raised its benchmark interest rate by 25 basis points to 5.75% on June 18, 2026, marking the third consecutive hike in two months and a total tightening of 100 basis points since April. The move aims to support the rupiah, curb inflation pressures and respond to global monetary tightening.

In the days after the announcement, the Jakarta Stock Exchange (IHSG) gained 2.82% for the week, pushing total market capitalization to roughly Rp10.788 trillion. Meanwhile, the central bank purchased nearly Rp200 trillion of government bonds (SBN) within a fortnight, boosting its holdings to over Rp2 trillion.

Business groups, including the Indonesian Chamber of Commerce and Industry (Kadin) and the Indonesian Business Council (IBC), welcomed the policy as necessary for macro‑stability but warned that higher funding costs will affect firms and consumers. Government officials said banks were not instructed to hold loan rates steady; instead, they are urged to improve efficiency to keep credit flowing.

Economists from Mirae Asset, BTN and major banks deemed the hike appropriate for stabilising the rupiah and containing imported inflation, while consumer‑finance advisers urged households to postpone new credit and consider low‑risk assets such as deposits and bonds.