Bank Indonesia raises BI Rate to 5.5% in emergency step

Bank Indonesia raised the BI Rate by 25 basis points to 5.5% in an off-schedule move to curb the rupiah's slide toward a record low against the U.S. dollar. Reuters and CNBC International highlighted the decision as a surprise to markets, after most economists had expected the benchmark rate to stay at 5.25%. BI said the 7-day reverse repo rate increase is a follow-up step to strengthen rupiah stabilization amid global volatility from the war in the Middle East, while keeping 2026-2027 inflation within target. The reports also noted BI's aggressive intervention in the foreign-exchange market, which has pushed foreign reserves to their lowest level in nearly two years, even after the government last month sold US dollar- and euro-denominated bonds worth US$3.5 billion.