Citing a need to stabilize the exchange rate of the rupiah, the nation's currency, Bank Indonesia on Thursday left policy interest rates unchanged, but signaled more rate cuts were possible in 2026.

The central bank's board left the Bank Indonesia key interest rate at 4.75%, the deposit facility rate at 3.75%, and the lending facility interest rate at 5.50%.

"This decision is consistent with the current policy focus on strengthening the stabilization of the rupiah exchange rate," said Bank Indonesia.

Indonesia's rupiah declined by about 3.5% against the US dollar in 2025, and then by another 2% in early 2026, but has been roughly steady in recent weeks.

In general, to defend a national currency in foreign-exchange markets, central banks will relatively raise interest rates, tightening the money supply, and reducing the volume of the national currency trading against the US dollar, or other metrics.

Last year, operating in an economy marked by moderate inflation, Bank Indonesia cut its policy rate, in stages, from a high of 6.25% in mid-2024 to 4.75% in September of 2025.

However, in five policy sessions since September, Bank Indonesia has kept monetary policy largely steady, citing FX rates and also relatively strong economic growth.

Indonesia's gross domestic product (GDP) expanded by 5.1% in 2025, and Bank Indonesia's most recent forecast projects the nation's economy to expand by another 4.9% to 5.7% in 2026.

Indonesia's inflation picture is perhaps more worrisome to Bank Indonesia, with the consumer price index (CPI) rising by 3.55% on year in January, just above the central bank's target range of 2.5% plus or minus 1%. The rate of inflation in Indonesia has been steadily rising since early 2025.

Despite the January inflation report, Bank Indonesia on Thursday said it was "monitoring the space for further (interest rate) rate cuts in line with the controlled inflation forecast for 2026-2027."