Bank Indonesia voted to hold its benchmark interest rate at 5.75% at today's meeting, marking a second consecutive hold and matching analyst expectations, after the rupiah strengthened nearly 1% this month, easing pressure for tighter monetary policy. The meeting was the first under acting governor Destry Damayanti, with the board having raised rates by a total of 1% this year to support the rupiah and restore investor confidence. Destry said the rupiah should continue to strengthen, and the central bank is using all monetary tools while expanding incentives to attract foreign capital inflows. It also maintained its economic growth forecast for Indonesia for 2026 at a range of 4.9% to 5.7% and will coordinate closely with the government to support the economy. Investors watched the meeting closely because Destry is the sole nominee put forward by President Prabowo Subianto to become governor of Bank Indonesia, after Perry Warjiyo abruptly resigned in late July, raising concerns about central bank independence.
BI holds rate, rupiah strengthens, reducing need for further hikes, likely lower Indonesian yields
