{
  "id": 12036617,
  "title": "BI can hold rates, but Indonesia cannot escape expensive money",
  "url": "https://urgent.news/2026/10/02/bi-can-hold-rates-but-indonesia-cannot-escape-expensive-money-12036617",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-02T01:08:08.000Z",
  "source": {
    "name": "The Jakarta Post Academia",
    "slug": "the-jakarta-post-academia",
    "url": "https://www.thejakartapost.com/opinion/2026/10/02/bi-can-hold-rates-but-indonesia-cannot-escape-expensive-money.html"
  },
  "original_language": "en",
  "account": "Indonesia's central bank, Bank Indonesia (BI), maintained its key interest rate at 5.75 percent in September, despite other major central banks raising rates. This decision came amid inflationary pressures due to geopolitical tensions driving up global energy prices. The BI board's choice mirrored expectations and aimed to avoid burdening businesses and households with higher borrowing costs. However, holding the rate steady carries risks as the advantage Indonesian assets offer compared to foreign investments narrows. For example, in September, Indonesia's 10-year government bond yielded about 7.1 percent, compared to roughly 4.9 percent for US Treasury bonds. This 2.2 percentage-point gap compensates investors for risks associated with rupiah-denominated debt. If the yield spread proves inadequate, capital outflows could weaken the rupiah, boost bond yields, and eventually prompt BI to raise its rate more aggressively. The newly appointed economic policymakers, BI Governor Destry Damayanti and Finance Minister Suahasil Nazara, face distinct challenges. While Damayanti may delay further rate hikes, Nazara cannot fully protect the budget from the higher cost of borrowing. As bond yields climb, the government will increasingly pay more for new debt or refinancing existing obligations. By the end of August, the Finance Ministry reported that the government had spent about Rp 394 trillion (US$23.5 billion) on interest payments, exceeding Indonesia's entire 2026 health budget of Rp 244 trillion by around Rp 150 trillion.",
  "summary": "As high-cost borrowing collides with ambitious state spending, Indonesia must master smarter debt management and innovative finance before fiscal pressure catches up with its national ambitions.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 2,
    "also_reported_by": [
      {
        "outlet": "The Jakarta Post",
        "title": "BI can hold rates, but Indonesia cannot escape expensive money",
        "url": "https://urgent.news/2026/10/02/bi-can-hold-rates-but-indonesia-cannot-escape-expensive-money",
        "published": "2026-10-02T01:08:08.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}