BI Surprises by Holding Rate at 5.75%, But Further Tightening Possible – MUFG

Bank Indonesia (BI) unexpectedly held its benchmark interest rate at 5.75% at its latest meeting, contrary to widespread forecasts of a 25-basis-point hike. The decision was supported by a recent stabilization in the Indonesian rupiah, which alleviated immediate pressure on policymakers.

According to MUFG analyst Lloyd Chan, the central bank may still need to tighten monetary policy ahead, despite today's pause. Chan noted that the rupiah's improved performance allowed BI to remain on hold, but underlying inflation and external risks could prompt action later.

Market participants are now watching for further guidance from BI and any shifts in the rupiah's trajectory as global monetary conditions evolve.