Bank Indonesia Holds Interest Rates Steady at 5.75%

Bank Indonesia held its benchmark 7-day reverse repurchase rate steady at 5.75% on Wednesday, September 23. The central bank also maintained the overnight deposit facility rate at 4.75% and the lending facility rate at 6.50%, aligning with market expectations.

This decision marks the first policy meeting led by Destry Damayanti, the first woman governor of the bank. Governor Damayanti stated the move is intended to stabilize the rupiah, support economic growth, and keep inflation within a target range of 1.5% to 3.5%. The pause follows a period of aggressive tightening in May and June, during which the bank raised rates by 100 basis points to defend the national currency.

The policy announcement occurs amid a period of institutional transition and investor anxiety. The bank recently saw the surprise resignation of former Governor Perry Warjiyo in late July. Market concerns regarding political interference have intensified following President Prabowo Subianto's decision to appoint his nephew to a senior role within the central bank.