Bank Indonesia's new governor promised growth, then left the rate alone

Destry Damayanti took charge of Bank Indonesia earlier this month, the first woman to run it. At her first policy meeting on Wednesday, she did nothing. Nikkei Asia reports that the bank held its benchmark rate, the 7-day reverse repurchase rate, at 5.75 per cent. That rate sets the price of borrowing for the whole economy, so leaving it alone means loan costs stay where they are. Almost nobody was surprised: 29 of the 32 economists polled by Reuters expected exactly this. Destry said the choice fits the bank's effort to "stabilize the rupiah, maintain inflation within target" and support growth.

The hold matters because of what she said on the way in. At her confirmation hearing in August she promised a "pro-growth" Bank Indonesia, and markets read that as a lean towards cutting. Her first act as governor was to leave the rate exactly where she found it. Recent history explains the caution. Between May and June the bank raised rates three times, by 100 basis points in total, which is one full percentage point, to defend the rupiah after it fell to record lows against the dollar. The currency recovered for a while, then slipped again these past weeks as investors worried about how much the government is spending.

Prices look calmer than the currency. Inflation was 3.19 per cent in August, inside the bank's target band of 1.5 to 3.5 per cent, though it sits there partly because the government is paying to hold fuel prices down. The bank kept its 2026 growth forecast at 4.9 to 5.7 per cent and nudged its 2027 range up to 5.2 to 6 per cent. What it cannot steer is money leaving the country, and foreign investors are still pulling funds out, unhappy about the spending and about how clearly the stock exchange reports what happens on it.

Why it matters

If you carry a mortgage, a motorcycle loan or a business overdraft, your monthly payment does not change this month. The cut borrowers were hoping for now depends on the rupiah, so watch the currency rather than the bank's language. Cheap fuel is doing quiet work inside that inflation number, which means any change to the subsidy would reach the pump and the market stall long before it reaches the interest rate.