DBS Bank Sees Room for 50bps Indonesia Rate Hike in 2026 if Rupiah Weakens

DBS Bank says Indonesia still has room for another 50 basis points of interest-rate increases in the second half of 2026 if the rupiah weakens further and geopolitical tensions remain elevated, according to the bank’s executive director and senior economist, Radhika Rao, in comments reported by Bloomberg.

Rao’s assessment comes as Indonesia’s central bank is operating under a newly expanded mandate that goes beyond price stability. According to Bloomberg Economics, Indonesia has broadened Bank Indonesia’s objectives to include support for real-sector growth, while also giving parliament the power to evaluate the central bank’s performance.