Indonesia holds its policy rate, raises the deposit rate
Bank Indonesia kept its policy rate at 5.75 percent while raising the overnight deposit facility rate to 5 percent. The October package combines support for the rupiah with planned reductions in bank reserve requirements. Inflation remains within the target range, and expanded currency hedging incentives aim to attract capital and deepen domestic financial markets.
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The deposit rate rises while the benchmark holds
Bank Indonesia left its policy rate at 5.75 percent after its governors met on October 20–21. It raised the overnight deposit facility rate by 25 basis points to 5 percent and kept the lending facility rate at 6.50 percent. Banks therefore face a higher return on overnight deposits at the central bank, alongside an unchanged benchmark and lending rate.[1], [2]
The benchmark has now stayed unchanged through four monthly reviews following June’s increase. Before the decision, a Reuters poll cited by EconoTimes found that 15 of 29 economists expected a hold, while 14 expected an increase of at least 25 basis points. September annual consumer inflation was 3.28 percent, within the bank’s target of 2.5 percent plus or minus one percentage point.[1]
Reserve requirements will fall in two steps
Conventional commercial banks’ reserve requirement is scheduled to fall from 9 percent to 8 percent on November 1, then to 7 percent on December 1. The planned reductions are intended to support liquidity and lending. They sit alongside the deposit-rate increase in a package that seeks to support both the currency and bank financing, rather than relying on a change in the benchmark alone.[1]
Bank Indonesia says macroprudential policy will continue supporting credit and financing for the real economy while preserving financial stability. Its payment measures focus on wider acceptance of digital payments, stronger risk management by payment providers and more reliable infrastructure.[2]
Currency hedging incentives expand
The bank also expanded incentives for qualifying domestic non-deliverable forward hedges, instruments used to manage currency risk. It says the incentives aim to attract foreign capital, help stabilise the rupiah and deepen domestic money and foreign exchange markets. The bank cited continuing external pressures and intends to keep inflation inside its target range in both 2026 and 2027. The next governors’ meeting is scheduled for November 17–18.[1], [2]
The bank’s transaction-based JISDOR reference was 18,006 rupiah per dollar on October 20 and 17,986 on October 21. This official currency reference and a market closing quote are separate observations.[1]
