Key Takeaways
- • Bank Indonesia held its benchmark seven-day reverse repurchase rate at 5.75% on Wednesday, Oct 21, 2026, marking a fourth consecutive hold, according to Reuters.
- • The central bank raised its overnight deposit facility rate by 25 basis points to 5.00% while keeping its lending facility rate at 6.50%.
- • Only 15 of 29 economists surveyed by Reuters expected a hold; the remainder had projected a hike of at least 25 basis points to counter the selloff.
- • Indonesia's stock market recorded a record two-day decline and the rupiah traded near an all-time low, driven by an MSCI warning that it could reclassify Indonesian equities to standalone market status.
- • Bank Indonesia had already raised rates by a total of 100 basis points across three moves between May and June to support the rupiah.
Summary
Bank Indonesia left its benchmark seven-day reverse repurchase rate unchanged at 5.75% on Wednesday, the fourth consecutive policy review without a change, according to Reuters. The decision came as the country's equity market suffered a record two-day decline and the rupiah traded near an all-time low. Although the benchmark was held, the central bank lifted its overnight deposit facility rate by 25 basis points to 5.00%, while its lending facility rates remained at 6.50%.
The decision diverged from market expectations. Of the 29 economists surveyed by Reuters, 15 had anticipated the benchmark would be held, while the remaining respondents had projected an increase of at least 25 basis points to counter the selloff. The deposit rate adjustment signals that the central bank is tightening liquidity conditions at the margin while preserving its headline policy rate.
The currency and equity pressure followed a warning last week from MSCI that it could reclassify Indonesian equities to standalone market status, which triggered the selloff. Bank Indonesia had already raised rates by a total of 100 basis points across three moves between May and June to support the rupiah, and the currency has faced renewed pressure in recent days.
The source material provided limited further detail on the magnitude of the equity declines or the central bank's forward guidance. Investors monitoring Indonesian fixed income, currency and equity exposure should watch the rupiah's trajectory and any MSCI decision on market classification.
The decision diverged from market expectations. Of the 29 economists surveyed by Reuters, 15 had anticipated the benchmark would be held, while the remaining respondents had projected an increase of at least 25 basis points to counter the selloff. The deposit rate adjustment signals that the central bank is tightening liquidity conditions at the margin while preserving its headline policy rate.
The currency and equity pressure followed a warning last week from MSCI that it could reclassify Indonesian equities to standalone market status, which triggered the selloff. Bank Indonesia had already raised rates by a total of 100 basis points across three moves between May and June to support the rupiah, and the currency has faced renewed pressure in recent days.
The source material provided limited further detail on the magnitude of the equity declines or the central bank's forward guidance. Investors monitoring Indonesian fixed income, currency and equity exposure should watch the rupiah's trajectory and any MSCI decision on market classification.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.