Decision announced March 3 in Jakarta cites global uncertainty, inflation outlook, and currency pressures
JAKARTA, March 3, 2026 — Bank Indonesia on Tuesday kept its benchmark seven-day reverse repurchase rate unchanged at 6.25% during its monthly policy meeting in Jakarta, citing the need to stabilize the rupiah, maintain inflation within its 1.5% to 3.5% target range, and mitigate risks from global financial market volatility. Governor Perry Warjiyo said the decision was made to balance domestic growth with external pressures, particularly rising U.S. Treasury yields and geopolitical uncertainty. The central bank also maintained the deposit facility rate at 5.50% and the lending facility rate at 7.00%.
The announcement followed a two-day meeting of the bank’s Board of Governors held March 2–3 at its headquarters in the capital. The policy stance aims to safeguard macroeconomic stability while supporting projected economic growth of 4.8% to 5.6% in 2026. Officials said the move reflects current inflation trends and exchange rate developments.
Inflation Remains Within Target
Bank Indonesia reported annual headline inflation of 2.7% in February 2026, down from 2.9% in January, remaining within the bank’s target corridor. Core inflation stood at 2.5%, reflecting stable domestic demand and controlled imported price pressures.
“The decision to maintain the policy rate is consistent with our efforts to ensure inflation remains within target and to stabilize the rupiah amid heightened global uncertainty,” Warjiyo said during a press briefing. He added that the bank would continue to intervene in foreign exchange markets if necessary to smooth volatility.
Food price inflation, which contributed to volatility in 2024, has moderated following improved supply distribution and favorable harvest conditions in major agricultural regions. Energy subsidies maintained by the government have also helped cushion consumer prices.
Rupiah Under External Pressure
The rupiah has depreciated 3.2% against the U.S. dollar since the beginning of 2026, trading at 15,750 per dollar on March 2, according to central bank data. The decline reflects capital outflows from emerging markets amid expectations of prolonged high interest rates in advanced economies.
Bank Indonesia said it has intensified its “triple intervention” strategy in the spot, domestic non-deliverable forward, and government bond markets to maintain currency stability. Foreign exchange reserves stood at $142.6 billion at the end of February, equivalent to 6.3 months of imports.
“Exchange rate stability remains a priority, as it supports price stability and investor confidence,” Warjiyo said. He noted that Indonesia’s external position remains sound, with a current account deficit projected at 0.5% to 1.3% of gross domestic product in 2026.
Growth Outlook Supported by Domestic Demand
Indonesia’s economy expanded 5.1% in 2025, according to Statistics Indonesia, supported by household consumption and public investment. Bank Indonesia projects similar growth momentum this year, driven by infrastructure spending and private sector investment.
The government has allocated 423 trillion rupiah ($27 billion) in the 2026 state budget for infrastructure projects, including transportation, energy transition, and digital connectivity initiatives. Authorities expect these investments to bolster employment and productivity.
Finance Minister Sri Mulyani Indrawati said in a separate statement that fiscal policy would remain coordinated with monetary authorities. “We will continue strengthening policy synergy to maintain macroeconomic stability and support sustainable growth,” she said.
Credit Growth and Banking Sector Conditions
Bank Indonesia reported that bank lending grew 10.8% year-on-year in January 2026, supported by corporate and micro, small, and medium enterprise financing. Loan growth is projected to reach 11% to 13% for the full year.
The banking sector’s capital adequacy ratio stood at 26.1% in January, well above the regulatory minimum. Non-performing loans remained stable at 2.4% of total loans.
Liquidity conditions were described as adequate, with third-party funds increasing 6.9% year-on-year. The central bank said macroprudential incentives remain in place to encourage lending to priority sectors.
Global Economic Risks Persist
Bank Indonesia cited slower global growth and financial market volatility as key external risks. The World Bank’s January update on Indonesia’s economic prospects warned that tighter global financial conditions could affect capital flows and currency stability. The report is available at https://www.worldbank.org/en/country/indonesia/publication/indonesia-economic-prospects.
Advanced economy central banks have maintained restrictive monetary policies to combat inflation, contributing to higher global borrowing costs. Commodity prices, including coal and palm oil—two of Indonesia’s major exports—have shown price fluctuations in recent months.
“Global uncertainty remains elevated, particularly regarding interest rate trajectories in major economies and geopolitical developments,” Warjiyo said. He emphasized that policy decisions would remain data-dependent.
Coordination With Government Policy
Bank Indonesia reiterated its commitment to strengthening coordination with the government under the Financial System Stability Committee framework. The committee includes representatives from the Finance Ministry, the Financial Services Authority, and the Deposit Insurance Corporation.
Authorities said joint efforts focus on safeguarding financial system resilience and supporting structural reforms. These reforms include digital payment expansion, local currency settlement arrangements, and financial market deepening initiatives.
The central bank also reported continued growth in digital transactions, with electronic money transactions rising 14.2% year-on-year in January. QRIS, Indonesia’s national QR payment standard, processed 2.3 billion transactions during the month.
Policy Outlook
Bank Indonesia stated that future policy adjustments would depend on inflation trends, exchange rate movements, and global economic developments. Officials indicated readiness to use both monetary and macroprudential tools to achieve price stability and support growth.
“Our priority is maintaining stability while fostering sustainable economic expansion,” Warjiyo said. He added that the central bank would continue transparent communication to guide market expectations.
The next policy meeting is scheduled for April 15–16, 2026, in Jakarta.