Financial Market Risks Remain High, BI Predicted to Maintain BI Rate in February 2026

Amid rising financial market risks, Bank Indonesia (BI) is expected to keep the benchmark interest rate unchanged at 4.75% during the February 2026 Board of Governors meeting. This strategy targets maintaining the stability of the Indonesian rupiah amid increasing market conditions. Chief Economist of Bank Pertama, Josua Pardede, highlights that this decision follows a warning from Morgan Stanley Capital International (MSCI) regarding the free float issue and Moody’s revision of Indonesia’s debt outlook from stable to negative. These changes could lead to higher risk premiums and increased capital flow volatility. BI continues prioritizing exchange rate stability and investor confidence, extending to the short-term prospects of monetary easing. Although a rate cut is anticipated in the future, this space is currently constrained by prevailing external pressures. BI Governor Perry Warjiyo emphasized the three key components when formulating monetary policy: inflation, exchange rate, and economic growth. With current inflation below the target, there is little room for further rate cuts.