Bank Indonesia Urges Banks to Hold Loan Rates After Benchmark Hike

Bank Indonesia's decision to raise the benchmark BI-Rate by 50 basis points to 5.25 percent reflects a careful balancing act between maintaining economic stability and fostering growth. Governor Perry Warjiyo's call for commercial banks to hold steady on credit interest rates, despite the hike, underscores the central bank's focus on ensuring that credit expansion remains robust. This move is crucial for supporting the Indonesian economy, which saw bank credit expand by 9.98 percent year-on-year in April 2026.

The central bank's commitment to managing liquidity through measures like purchasing government securities demonstrates a proactive approach to market stability. Governor Warjiyo's confidence in the rupiah's stability and its tendency to strengthen, alongside the belief that the policy mix will keep inflation within the target range of 1.5 percent to 3.5 percent, highlights the bank's strategic outlook. The targeted economic growth of 4.9 percent to 5.7 percent and credit growth between 8 to 12 percent are ambitious yet achievable goals under the current policy framework.

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Therefore, we ask banks to improve their efficiency so that they don't raise loan interest rates.

From an Indonesian perspective, these policies are vital for navigating global economic uncertainties. While international coverage might focus on the interest rate hike itself, the local emphasis is on how Bank Indonesia is working to ensure that this measure does not stifle economic activity. The governor's direct appeal to banks to improve efficiency and avoid raising loan rates is a key takeaway, showing a desire to protect businesses and consumers from the full impact of monetary tightening. This approach prioritizes sustained growth while managing inflationary pressures, a delicate but necessary task for the nation's economic health.

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With the various policies we have implemented, we believe the rupiah will remain stable and tend to strengthen.