Indonesia's central bank ends rate pause with surprise hike

Bank Indonesia on Wednesday raised its benchmark interest rate, the BI-Rate, by 50 basis points to 5.25 percent, ending a streak of eight consecutive months in which rates had remained unchanged, News.Az reports, citing Xinhua.

The decision was announced after the central bank’s two-day Board of Governors meeting, held from May 19 to 20.

Bank Indonesia stated that the rate increase was intended to strengthen the stability of the Indonesian rupiah amid worsening global conditions driven by the conflict in the Middle East.

The central bank also said the move aims to keep inflation within its target range of 2.5 percent, plus or minus 1 percentage point, for 2026 and 2027.

Market expectations ahead of the decision were mixed. A CNBC Indonesia poll of 15 financial institutions found that nine had expected a 25-basis-point hike to 5 percent, while six had forecast that the central bank would keep the rate unchanged at 4.75 percent.

News.Az 

By Nijat Babayev