TEMPO.CO, Jakarta - Bank Indonesia has aggressively raised its benchmark interest rate, but it has yet to be successful in encouraging foreign inflows into the country's bond market. As of June 12, the Indonesian bond market still records Rp13 trillion in outflows, according to the Indonesian bond pricing agency (PHEI).
Since last May, the central bank has raised its benchmark interest rate, or BI Rate, three times. "Has there been an influx in foreign investor interest? Based on the data, we haven't," said Salvian Fernando, Head of the Research and Market Information Department at PT Penilai Harga Efek Indonesia (PHEI), during an online press conference on Thursday, June 18, 2026.
There is indeed an increase in inflows of Rp3 trillion in June, but Salvian said it could not be categorized as "increase in interest given the too-small figure."
Furthermore, according to Salvian, the BI Rate hike aligns with the high bond yields in the near future as the market is recalculating new risks.
The BI Rate has remained at 4.75 percent since September 2025. On May 20, Bank Indonesia raised the benchmark interest rate by 50 basis points to 5.25 percent. The BI rate was raised again suddenly on June 9, outside the scheduled monthly Board of Governors Meeting (RDG), to 5.50 percent.
In the RDG on Thursday, June 18, 2026, Bank Indonesia decided yet again to raise the benchmark interest rate by 25 basis points to 5.75 percent.
According to an official statement from the central bank, the decision was a bid to further strengthen rupiah stability amidst persistently high global uncertainty. It was also a preemptive measure to keep inflation in 2026 and 2027 within the government's target range of 2.5 percent with a range of error of one percent.
When the BI rate suddenly increased on June 9, Bank Indonesia Governor Perry Warjiyo stated that the central bank was reluctant to raise interest rates. However, the decision was taken to attract foreign portfolio investment inflows into the country.
"We're raising it again to 5.5 percent. We don't like raising interest rates, but since the benchmark rates abroad are all rising, we are adjusting to attract foreign portfolio investment," Perry said on June 9, 2026, as quoted by Antara.
Read: Bank Indonesia Hikes Rate Again to 5.75 pct to Save Rupiah
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