BI Projected to Hold Benchmark Interest Rate at 4.75 Percent in January 2026 RDG

JAKARTA - Bank Permata Chief Economist Josua Pardede predicts that Bank Indonesia (BI) will maintain the BI-Rate at the level of 4.75 percent at the 2026 Jauari Governor's Council Meeting (RDG).

According to Josua, the decision was based on the still strong pressure on the rupiah exchange rate and the increasing sensitivity of the market to concerns about fiscal conditions.

"For the January RDG BI tomorrow, I estimate that BI will hold the BI Rate at 4.75 percent, because the pressure on the rupiah is still strong and the market is sensitive to fiscal concerns," he said in a statement, Wednesday, January 21.

On the other hand, Josua said that domestic demand was not considered to require additional stimulus through a reduction in interest rates.

He explained that consumer confidence in December 2025 was still in the optimistic zone with an index of 123.5, which was supported by the perception of the current economic conditions of 111.4 and the expectations of the future economy which reached 135.6.

In addition, he added that retail sales in November 2025 were recorded to have grown 6.3 percent year-on-year and still experienced monthly increases.

From the industrial sector, manufacturing activity also showed expansion with the Bank Indonesia Purchasing Managers' Index (PMI) in the fourth quarter of 2025 at 51.86.

Josua added that business activities were also relatively maintained, reflected by the Weighted Net Balance (SBT) which reached 10.61 in the fourth quarter of 2025 and is expected to increase to 12.93 in the first quarter of 2026.

With this condition, Josua assessed that BI would choose to hold interest rates while still prioritizing exchange rate stability and controlling inflation expectations.

"Even if BI wants to provide additional support to growth and credit distribution, the safer path when the rupiah is fragile is to loosen liquidity and reduce the cost of short-term funds without changing the BI Rate, for example through the regulation of open market operations instruments," he said.