IDR: Policy on hold as BI defends currency – ING

FXStreet Insights Team FXStreet

ING’s Deepali Bhargava notes that Bank Indonesia (BI) kept its policy rate at 4.75%, focusing on Indonesian Rupiah (IDR) stability rather than tightening. With fuel subsidies containing inflation and Consumer Price Index (CPI) expected to stay within target, the bank is seen relying on non-rate tools. ING expects rates to remain unchanged through the third quarter, with potential for cuts by year-end.

Bank Indonesia prioritises rupiah stability

"Bank Indonesia left its policy rate unchanged at 4.75%, in line with expectations, underscoring its priority for maintaining currency stability."

"BI also remains comfortable with inflation as it expects it to remain within the target of 1.5-3.5%."

"As a result, BI is likely to rely on non‑rate tools to manage rupiah stability."

"With growth weakening, the central bank is unlikely to hike and is expected to stay on hold into 2026, limiting monetary support for the currency."

"As such, we continue to expect policy rates to remain unchanged through the third quarter this year, with softening growth potentially opening the door to rate cuts rather than hikes by year‑end."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD turns negative toward 1.1500 ahead of ECB rate decision

EUR/USD has come under fresh selling pressure and heads toward 1.1500 in Thursday's European trading. Rising bets that the European Central Bank will deliver a rate hike after its June policy meeting could limit the Euro's retreat amid renewed US Dollar demand. The focus now remains on the ECB's updated projections and Lagarde's words.

GBP/USD falls to 1.3350, awaiting US PPI

GBP/USD is falling back to near 1.3350 in the European session on Thursday. Increased hawkish Fed bets and looming Mideast geopolitical risks sponsor the latest leg up in the US Dollar, as traders brace for the US PPI data.

Gold sticks to modest recovery gains near $4,100; looks to US PPI

Gold holds mild recovery gains near the $4,100 region, managing to hold above the lowest level since November 2025. A softer Core US Consumer Price Index eased concerns about a runaway inflation spiral, weighing on the US Dollar and prompting some intraday short-covering around the precious metal. All eyes are now on the US PPI report.

XRP and XLM: Mild recovery attempts emerge amid mixed market signals

Ripple (XRP) and Stellar (XLM) show mild signs of recovery on Thursday after extending losses earlier this week. XRP is holding above the $1.10 level as bearish momentum begins to fade, while XLM has bounced modestly from a key support zone.

European Central Bank set to hike interest rates for first time in nearly three years

The European Central Bank is set to announce its monetary policy decision at 12:15 GMT following its June meeting. The Frankfurt-based institution is widely expected to raise its key interest rates by 25 basis points, taking the deposit facility rate to 2.25% from 2%.

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.