TEMPO.CO, Jakarta - Kiwoom Sekuritas Indonesia's Head of Research, Liza Camelia Suryanata, believes the increase in the BI Rate to 5.75 percent signals Bank Indonesia's preference for maintaining rupiah stability, despite the resulting higher cost of funds. She believes that in the short term, this policy will broaden the attractiveness of rupiah asset yields.
However, Liza said the impact on the stock market is mixed. She explained that, on the one hand, rupiah stabilization could lower Indonesia's risk premium and create positive sentiment for foreign investors. "But on the other hand, rising interest rates depress stock valuations, increase the cost of funds, and potentially slow consumption and investment," she said in a written statement on Thursday, June 18.
Liza highlighted Bank Indonesia's move to raise its benchmark interest rate by 100 basis points in approximately one month. According to her, this measure is considered aggressive by BI standards, although it is not comparable to periods of extreme crisis like 1998. Liza said the difference is that Indonesia is not currently facing a systemic crisis like the one in 1998. Rather, it is taking preemptive measures to defend the rupiah amid the Federal Reserve's hawkish policies.
Kiwoom Sekuritas views the BI Rate increase as a "stabilizing agent" rather than a complete solution. "BI can buy time and mitigate pressure on the rupiah, but sustained foreign inflows still require support from a credible fiscal stance, more efficient government spending, clearer policy communication, and more predictable regulations," Liza said.
The decision to raise the BI Rate to 5.75 percent was taken at the Bank Indonesia board of governors meeting on June 17-18, 2026. BI also decided to raise the deposit facility interest rate to 4.75 percent and the lending facility interest rate by 25 bps to 6.5 percent.
"Based on this comprehensive assessment, the Bank Indonesia Board of Governors meeting on July 17 and 18, 2026, decided to raise the BI Rate by 25 basis points to 5.75 percent," said BI Governor Perry Warjiyo in a press conference on Thursday, June 18.
He said that raising the BI rate was another step to strengthen the rupiah stability amid high global uncertainty.
Read: Bank Indonesia Hikes Rate Again to 5.75 pct to Save Rupiah
Click here to get the latest news updates from Tempo on Google News
Did Bank Indonesia Rate Hikes Attract Foreign Inflows?
3 jam lalu
Indonesian bond market still records Rp13 trillion in outflows despite Bank Indonesia's multiple rate hikes.
Bank Indonesia Hikes Rate Again to 5.75 pct to Save Rupiah
8 jam lalu
In its previous meeting on June 9, Bank Indonesia lifted the benchmark rate to 5.50 percent as the rupiah was under pressure.
Foreign Capital Totals Rp45.92 Trillion Into Indonesia, BI Says
6 hari lalu
BI also recorded the rupiah closing at the level of Rp 17,865-Rp 17,875 per US dollar (AS) or strengthening by 0.84 percent compared to the previous week.
Bank Indonesia Unexpectedly Raises Interest Rate to 5.5%
9 hari lalu
Bank Indonesia previously announced its interest rate policy after its monthly RDG meeting, held in the middle of each month.
JCI Slips at Close Led by Losses in Basic Materials Stocks
29 hari lalu
JCI closed weaker by 52.18 points or 0.82 percent to the position of 6,318.50.
Bank Indonesia May Lift Benchmark Rate to 5% as Rupiah Weakens
37 hari lalu
Bank Indonesia is predicted to raise the benchmark interest rate in May or June 2026 if the rupiah continues to weaken.
Bank Indonesia Prepares Measures to Safeguard Rupiah Stability
54 hari lalu
Bank Indonesia's efforts to maintain the benchmark interest rate are one of the steps to safeguard the stability of the rupiah exchange rate against the US dollar.
Bank Indonesia Maintains Benchmark Interest Rate at 4.75%
57 hari lalu
Bank Indonesia (BI) has decided to maintain the benchmark interest rate or BI Rate at the level of 4.75 percent.
Bank Indonesia Governor Says Scope for Interest Rate Cuts Is Shrinking
8 April 2026
In 2025, Bank Indonesia cut its benchmark rate five times by 125 basis points in total, bringing it down to 4.75 percent.
Bank Indonesia Holds Benchmark Interest Rate at 4.75%
17 Maret 2026
Bank Indonesia has decided to maintain the benchmark interest rate to preserve the value of the rupiah amidst the Iran-Israel war.
