Central Bank stands pat in April

Bank holds rates for seventh meeting in a row: At its meeting on 21–22 April, Bank Indonesia (BI) decided to hold the BI-Rate at 4.75% for the seventh consecutive meeting, matching market expectations.

Monetary policy drivers: The decision reflects Bank Indonesia’s aim to support the rupiah amid deteriorating global conditions and heightened uncertainty linked to the war in the Middle East and to maintain inflation within its 1.5%–3.5% target range. The conflict prompted BI to revise 2026 global GDP growth lower and raise its global inflation forecast, citing energy price shocks that are disrupting supply chains and fueling inflation. Moreover, the Bank stated that the Fed is likely to keep rates elevated through year-end, narrowing the scope for near-term domestic rate cuts.

BI to remain cautious ahead: Bank Indonesia stated that it is prepared to tighten monetary conditions, if needed, to provide support to the domestic currency and maintain inflation within target. The majority of our panelists now expect the Bank to hold fire through the end of 2026 amid heightened geopolitical uncertainty and tighter global financing conditions. BI is scheduled to reconvene on 19–20 May.

Panelist insight: Commenting on the outlook, UOB’s Enrico Tanuwidjaja and Vincentius Ming Shen stated: “Looking ahead, BI is expected to maintain a hawkish hold through 2026, with limited room for rate cuts given persistent global uncertainties. Currency stability will continue to rely on SRBI optimization, FX interventions, and regulatory tightening, while growth support will be anchored by credit incentives and payment system modernization. Inflation, particularly food inflation, will be managed through close coordination with the government under the Movement for Inflation and Food Prosperity (GPIPS) program.”

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