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Bank Indonesia Keeps Rates Steady, as Rupiah Weakness Threatens to Delay Easing

Bank Indonesia left its policy rate unchanged at 4.75% as the rupiah continued to weaken amid fiscal‑sustainability concerns and volatile investor sentiment. Moody’s downgraded Indonesia’s credit outlook to negative, reflecting uncertainty over policy direction and transparency. Real‑rate differentials with the United States have narrowed by more than one percentage point, adding pressure on the currency while foreign‑investor outflows persist. Although Q4 GDP growth accelerated to 5.4% year‑on‑year, the central bank sees limited upside and projects two further 25‑basis‑point cuts in early 2026, albeit with a risk of delay.