Bank Indonesia Keeps Key Rate Steady as MSCI Downgrade Risk Weighs
Bank Indonesia held its benchmark rate at 5.75% but raised its deposit facility rate to 5.0%. The rupiah is under pressure as MSCI weighs a downgrade of Indonesian equities.
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what happened
Indonesia's central bank kept its benchmark seven-day reverse repo rate at 5.75%, in line with the view of seven of nine economists polled by The Wall Street Journal. Two had expected a quarter-point increase. The overnight deposit facility rate rose by a quarter point to 5.0%, while the lending facility rate stayed at 6.50%.
Governor Destry Damayanti said at a press conference that the decision aims to stabilize the rupiah, attract foreign capital and keep inflation within the target range. Markets are under pressure from MSCI's proposal to downgrade Indonesia's equity market over transparency concerns, with a final decision expected in June 2027.
why it matters
A move from emerging-market to standalone status would remove Indonesian equities from MSCI's main indexes used by global funds. After the proposal, Indonesian stocks posted their steepest drop since the 1998 Asian financial crisis, and bond selling and capital outflows accelerated. CIMB analysts said a quarter-point rate increase in November is possible.
market impact
Indonesian stocks, bonds and the rupiah: index-exclusion risk and capital outflows add pressure on local assets
tags
instruments
sources
- Bank Indonesia Holds Key Rate as MSCI Downgrade Threat Weighs on Markets — Dow Jones Newswires, 21 October 2026 at 07:12 UTC
- Bank Indonesia Holds Key Rate as MSCI Downgrade Threat Weighs on Markets—Update — Dow Jones Newswires, 21 October 2026 at 09:09 UTC
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