Citing a need to stabilize the nation's faltering currency, the rupiah, in foreign exchange markets, Bank Indonesia on Wednesday left its policy interest rates unchanged.

The central bank's benchmark rate was held at 4.75%, while the deposit facility rate was left at 3.75%, and the lending facility rate remained at 5.50%, advised Bank Indonesia.

"This decision is consistent with the current policy focus on efforts to stabilize the rupiah exchange rate," explained the central bank.

The Indonesian rupiah has depreciated mildly against the US dollar in 2026, down by 1.6%, but is down by 3.7% in the last 52 weeks, and down to fresh all-time lows.

Bank Indonesia officials are less concerned about price hikes; the nation's official inflation rate logged at 2.92% in December, which was within the central bank's 2.5%, plus or minus 1%, inflation-target band.

Bank Indonesia had reduced interest rates by a cumulative 150 basis points between September 2024 and September of last year, but since has held steady, stating concerns about the rupiah's outlook.

The Indonesian central bank is, in general, content with the nation's economic growth outlook, and in November estimated Indonesia's gross domestic product (GDP) would expand by 5.33% in 2026.

Nevertheless, FX markets appear chary about the rupiah, given relations between the central government and the national government.

The Indonesian currency sank to new nadirs on Tuesday, after President Prabowo Subianto said he would nominate his nephew to a senior position at Bank Indonesia, aggravating concerns about political interference in monetary policy, reported the Hong Kong-based Asia Financial.

Despite the soft rupiah, Bank Indonesia officials held the door open to rate cuts in 2026.

"Going forward, Bank Indonesia will continue to strengthen the transmission of monetary and macro-prudential easing already in place, while closely assessing room for further BI-rate cuts as long as inflation in 2026 and 2027 remains within the 2.5% plus or minus 1% target," said Bank Indonesia Governor Perry Warjiyo at the central bank press conference on Wednesday.