Indonesia's BI Rate Hike Triggers Rupiah Weakness, Stock Slide and Calls for State Bank Support

On 18 June 2026 Bank Indonesia raised its benchmark interest rate to 5.75 %. The move pushed the rupiah down to roughly Rp 17,845 per US dollar and saw the Jakarta Composite Index open lower at 6,191 points, a 0.46 % decline. MSCI warned that Indonesia could face outflows of up to $13 billion if its market‑classification were downgraded, adding further pressure on equities.

President Prabowo Subianto and senior officials, including Coordinating Minister for Economic Affairs Airlangga Hartarto and Investment Minister Rosan Roeslani, urged the Association of State‑Owned Banks (Himbara) not to raise loan rates despite the tighter policy. They emphasized that Himbara should serve as a “national economic engine,” expanding credit to micro‑, small‑ and medium‑size enterprises and productive sectors such as manufacturing, natural‑resource downstreaming and infrastructure. The combined market capitalisation of Himbara banks is about Rp 1,100 trillion, roughly 10 % of Indonesia’s total market value.

Banking leaders were also asked to improve efficiency and maintain credit flow while keeping non‑performing loans low. Credit growth in the banking sector has averaged 15 % over the past year, and liquidity remains solid. The government’s credit‑priority list and the call for state banks to support the broader economy aim to mitigate the fallout from the rate hike and sustain growth amid a volatile global monetary environment.