Staying hawkish. As widely expected, BI kept its policy rate unchanged again at 4.75% (Exhibit 1). BI raised SRBI rates but left the policy rate unchanged to avoid tightening credit conditions while still defending the Rupiah. However, BI continued to say macroprudential policy remains geared toward supporting growth. SRBI rates have been raised by 60bp since the war started (see Policy Watch: Sustained SRBI Rate Increase Unlikely to Trigger BI Rate Hike).
New FX market toolkit. BI introduced two structural FX measures to help stabilize the Rupiah. First, selected primary dealers are exempted from the offshore NDF sell ban to reduce market segmentation, improve price discovery, and narrow offshore-onshore spreads. Second, BI expanded its monetary operations toolkit with CNH/IDR spot and swap instruments, supporting both Rupiah stabilization and broader Local Currency Transaction usage in trade and investment.
Deteriorated external balance. In terms of forecast, BI cut the 2026 global growth outlook to 3% from 3.1%, raised global inflation to 4.2% from 4.1% previously, and flagged the possibility of the Fed staying on hold through 2026. On the domestic front, BI maintained its GDP growth forecast at 4.9 5.7% while flagging upside inflation risks to the 2.5 1% target for 2026. BI sees the inflation impact of the recent increase in non-subsidized fuel prices as negligible at +0.04%, requiring no policy response. BI now sees the CAD at 0.5 1.3% of GDP, wider than 0.1 0.9% before (Mansek: 1.1%).
Still-ample liquidity. Liquid assets-to-deposits ratio increased to 27.9% from 27.4% as liquidity support via RRR discounts increased slightly to IDR428tn from IDR427tn. Meanwhile, base money (M0) growth moderated to 11.8% y-o-y in March from 13.3% in February, reflecting softer post-Ramadan cash demand. SRBI outstanding rose sharply to IDR885tn as of 21 April, up from IDR831.6tn previously, a significant step-up in liquidity absorption reflecting intensified Rupiah defense.
Slightly higher loan growth. Loan growth edged up to 9.5% y-o-y in March from 9.4% in February, led by investment which increased to 20.9% y-o-y from 20.7% (Exhibit 2). The rapid loan growth came despite one-month lending rates having fallen only ~44bp versus the cumulative 150bp BI Rate cut. In addition, deposit growth increased to 13.6% y-o-y from 13.2% previously. As a result, loan to deposit ratio broadly stable at 86%, unchanged from February suggesting that banking system s liquidity remained adequate.
We still expect a 25bp cut in 2026. We continue to expect one 25bp BI Rate cut to 4.50% in 2026 as core inflation remains muted with growth running below potential. Indeed, during the investor call, BI acknowledged underlying room for easing given inflation remains low. The risk to our call is re-escalation of geopolitical tension restoring oil price spike, leading to a more hawkish BI to defend the Rupiah. BI said it’s recalibrating toward exchange rate stability but added that a rate hike would only be considered if FX pressure turns persistent and inflation pass-through emerges.
Dual policy rate track. During the investor call, BI indicated that its policy toolkit has effectively split into two roles: the policy rate is kept steady to avoid tightening domestic credit conditions, while SRBI serves as an active instrument to attract foreign inflows, manage liquidity, and support the Rupiah (Exhibit 3). The resulting wider spread between SRBI rates and the policy rate is intentional, a deliberate design choice that BI is comfortable maintaining under current market volatility (Exhibit 4).
