Bank Indonesia maintained its benchmark policy rate at 5.75%, while increasing the Deposit Facility rate by 25 basis points to 5.00%.
The central bank also announced a phased reduction in reserve requirements for conventional commercial banks from 9% to 8% in November and 7% in December, alongside stronger incentives for currency hedging and foreign capital inflows.
These measures followed substantial pressure on Indonesian equities and the rupiah after MSCI warned that Indonesia could lose its emerging-market classification because of concerns about market transparency and trading practices.
MSCI's potential reclassification has not yet taken effect. Bank Indonesia
Primary source: Bank Indonesia — October 21 monetary policy decision
Why it matters strategically
Indonesia faces two different financial challenges.
The first is macroeconomic stability.
Currency depreciation increases the domestic cost of imported goods and foreign-currency obligations.
Higher interest rates could support the rupiah but potentially weaken domestic investment and credit growth.
The second is market accessibility.
MSCI's classification affects whether Indonesian equities qualify for inclusion in major international investment benchmarks.
A downgrade could create selling pressure from funds whose mandates require benchmark eligibility.
These mechanisms interact but cannot be addressed through monetary policy alone.
