Bank Indonesia cuts reserve requirements as liquidity support begins
A one-point reserve-requirement cut for conventional and Islamic banks takes effect on 1 November, while Bank Indonesia keeps its policy rate at 5.75% and focuses on rupiah stability.
Bank Indonesia reduced the reserve requirement for conventional commercial banks from 9% to 8% on 1 November 2026, while the requirement for Islamic commercial banks and units fell from 7.5% to 6.5%. The move is the first step in a two-stage reduction announced after the 20–21 October Board of Governors meeting.
The measure is intended to increase rupiah liquidity and support lending while Bank Indonesia keeps the BI-Rate at 5.75% and continues to prioritise exchange-rate stability. The central bank also raised the Deposit Facility rate to 5.00% and expanded incentives for domestic non-deliverable-forward hedging, signalling that the liquidity release is being paired with measures to manage capital flows and the rupiah.
For banks, a lower reserve requirement can release funds for loans or other assets, but the effect on earnings and credit growth will depend on demand, risk appetite and the central bank’s liquidity operations. The policy does not by itself guarantee faster lending or a weaker currency: Bank Indonesia said its inflation target remains 2.5% plus or minus 1 percentage point for 2026 and 2027, while external pressures remain a concern.
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