FX.co ★ Indonesia Holds Rates as Rupiah Remains Weak

Bank Indonesia (BI) has decided to maintain its benchmark interest rate at 4.75% for the fourth consecutive time during its January 2026 policy meeting. This move was anticipated by analysts, reflecting the central bank's effort to curb further depreciation of the rupiah amidst indications of slowing economic growth. As of January 20, 2026, the rupiah had depreciated by 1.53% compared to its standing at the end of December 2025. Since September of the previous year, the central bank has enacted cumulative interest rate cuts totaling 150 basis points, reducing the rate to its lowest point since October 2022 to foster economic growth. This latest decision underscores the bank's assessment that inflation for 2026 will remain within its target range of 2.5% ± 1%, backed by a stable rupiah and continued efforts to bolster economic expansion. BI has kept its GDP growth forecasts steady at 4.7%–5.5% for 2025 and 4.9%–5.7% for 2026. Additionally, both the overnight deposit facility rate and the lending facility rate remain unchanged at 3.75% and 5.50%, respectively. Recent figures indicate that GDP grew by 5.04% year-on-year in the third quarter, a slight decrease from the 5.12% growth observed in the second quarter.