JAKARTA - FEB UI's LPEM estimates that Bank Indonesia (BI) will maintain the benchmark interest rate (BI Rate) at 5.50 percent in the results of the Governor's Board Meeting (RDG) scheduled to take place on June 18, 2026.
Deputy Director of the FEB UI LPEM, Jahen Fachrul Rezki, said the decision to hold interest rates was considered appropriate after BI carried out aggressive monetary tightening since May 2026 with a total increase of 75 basis points.
This policy is considered sufficient to hold down pressure on the rupiah exchange rate while maintaining the stability of inflation expectations.
"Considering the tightening of policies that have been taking place gradually since May, the continued foreign exchange intervention, and the need to evaluate the impact of the recent measures, we believe that Bank Indonesia needs to maintain its policy interest rate at the level of 5.50 percent in the upcoming Board of Governors Meeting," wrote Jahen in his report on Wednesday, June 17.
Meanwhile, he added that annual inflation in May 2026 was recorded as increasing to 3.08 percent, compared to 2.42 percent in April 2026.
Jahen said the increase in inflation was mainly triggered by a spike in food prices due to the end of the harvest season, weather disruptions, and increased demand ahead of Eid al-Adha.
He added that inflationary pressure also came from the energy sector, especially after the adjustment of non-subsidized fuel prices and household liquefied petroleum gas (LPG).
However, the inflation rate is still within the Bank Indonesia target range of 1.5 percent to 3.5 percent.
In the future, Jehan said that the risk of inflation originating from food supplies and energy price adjustments still needs to be a concern.
Previously, he said on June 8, 2026, BI raised interest rates by 25 basis points outside the schedule of monthly meetings, continuing the 50 basis point increase that had been made in May.
According to him, the policy is considered relevant considering the continued weakening of the rupiah to touch a low of around Rp18,000 per US dollar.
He added that this condition occurred amid increasing investor concerns about a number of domestic risks, including the formation of Danantara Sumberdaya Indonesia (DSI), so that as a result, the bond market and the stock market both experienced foreign fund outflows.
Jehan said that although selling pressure by foreign investors was still ongoing, the Composite Stock Price Index (JCI) still recorded an increase thanks to the entry of funds from domestic investors.
In addition, he added that Bank Indonesia also increased the yield of Bank Indonesia Rupiah Securities (SRBI) as part of efforts to maintain the stability of the rupiah exchange rate.
On the other hand, Jehan said Indonesia's foreign exchange reserves had fallen by around US$1.3 billion since April and had decreased to US$11.6 billion in the last five months.
According to him, the decline reflects the continued intervention of Bank Indonesia in the foreign exchange market to maintain the stability of the rupiah.
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