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Indonesia Central Bank Raises Key Interest Rate to 5.25%

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Bank Indonesia raised the benchmark interest rate by 50 basis points to 5.25%, the central bank said Wednesday.

The deposit and lending facility rates were also raised to 4.25% and 6%, respectively.

The rate hike was faster than the 4.75% forecast by Trading Economics.

The central bank said the move is aimed at supporting rupiah stability and keeping inflation within the 2.5±1% target for 2026-2027.

The decision follows higher global volatility from the Middle East conflict, which has lifted oil prices and disrupted supply chains.

It said rate increases will be backed by liquidity management and foreign exchange intervention to draw in capital and maintain financial stability. Even so, Indonesia's economy is expected to grow 4.9% to 5.7% in 2026, supported by strong domestic demand and coordinated policy support.

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