Rupiah pressure seen keeping Indonesia’s key rate at 4.75% on March 17
Bengaluru — Bank Indonesia is expected to hold its benchmark interest rate steady at 4.75% for a sixth consecutive meeting on March 17, according to a Reuters poll of economists, as renewed pressure on the rupiah linked to the Middle East war limits the central bank’s ability to loosen monetary policy.
A strong majority of economists, 24 of 26 surveyed between March 9 and 12, forecast the central bank would keep its benchmark seven-day reverse repurchase rate unchanged at 4.75%. The overnight deposit and lending facility rates are also expected to remain steady at 3.75% and 5.50%, respectively.
The Indonesian central bank has maintained its policy stance since October, prioritising currency stability as the rupiah weakened amid global uncertainty. Renewed geopolitical tensions following the U.S.-Israeli war on Iran have intensified pressure on emerging-market currencies, including Indonesia’s.
The rupiah fell to a record low earlier this week and has declined more than 1% so far this year after losing about 4% in 2025, effectively closing the window for an immediate rate cut.
Bank Indonesia has previously signalled its willingness to support economic growth but has refrained from easing policy as currency volatility remains a central concern. Maintaining exchange-rate stability is a key element of the bank’s mandate.
“The central bank will hold as it can’t resume its accommodative stance given how much the rupiah has weakened over the past month, especially in the last couple of weeks after the U.S.-Iran conflict,” said Tay Qi Hang, economist at the Economist Intelligence Unit.
Investor sentiment has also been weighed down by concerns over fiscal credibility linked to the spending plans of Indonesian President Prabowo Subianto, which economists say could widen budget deficits.
Questions surrounding central bank independence after the appointment of the president’s nephew as a deputy governor have further unsettled markets, contributing to capital outflows.
The latest poll reflects a shift from an earlier Reuters survey in which about 85% of economists had anticipated rate cuts beginning in the second quarter.
Hang said February’s higher inflation reading alone was unlikely to determine the central bank’s decision but that currency weakness would delay any easing cycle.
“The timing of its next rate cut will likely be delayed until June at the earliest, as rupiah weakness constrains both the willingness and ability of the central bank to ease earlier,” he said.
