IBC Reminds Rupiah Stability Requires Credible Macroeconomic Policies

Jakarta, June 19, 2026 — Indonesian Business Council (IBC) views Bank Indonesia's decision to raise the BI-Rate by 25 basis points to 5.75 percent as an understandable step amidst still high global pressure, especially after the Federal Reserve maintained its benchmark interest rate and the Bank of Japan raised its policy rate to 1 percent. A small open economy, Indonesia cannot completely separate its monetary policy from global dynamics. The interest rate differential between Indonesia and developed countries affects capital flows, exchange rates, and financial system stability. In this context, raising the BI Rate is part of efforts to maintain rupiah stability, strengthen market confidence, control inflation expectations, and maintain financial system stability.

Chief Economist IBC Denni Purbasari stated that the current monetary policy needs to be interpreted as a response to external pressures, not solely due to domestic demand pressures. "The BI-Rate increase can be understood as a measure to maintain rupiah stability and inflation expectations. However, exchange rate stability cannot rely solely on interest rates. Indonesia needs a more credible policy mix, particularly through fiscal discipline, strengthening fiscal space, and consistent economic policy direction so that pressure on the rupiah can be alleviated in a more sustainable," Denni said.

IBC assesses that current inflationary pressures stem more from cost factors, including energy prices and production costs, than from surging domestic demand. Therefore, policy responses need to strike a balance between macroeconomic stability and real-sector resilience. On the other hand, relatively rapid interest rate increases must be anticipated, as they increase funding costs for businesses, households, and the government. Government bonds, as a market benchmark, can also influence investment decisions and economic activity.

"The business world understands the importance of maintaining rupiah stability. However, the rising cost of capital will also be felt in the real sector, especially for businesses managing cash flow, expansion, and employment. Therefore, coordination between the government, Bank Indonesia, and the Financial Services Authority (OJK) is crucial to maintain financial stability without overly suppressing growth," Denni said.

The IBC encourages strengthened coordination of macroeconomic, monetary, fiscal, and financial-sector policies to ensure a healthy banking system, continued financing for productive sectors, and strong market confidence in Indonesia. Amidst global uncertainty, the IBC believes that exchange rate stability, financial system health, and fiscal credibility are essential foundations for sustainable economic growth.