DBS Sees Room for 50bp More Indonesia Hikes in 2H 2026

DBS economist Radhika Rao said Indonesia could see another 50 basis points of rate hikes in the second half if the rupiah weakens further and geopolitical tensions persist. The call implies a more hawkish policy path, driven by FX pressure and external risk rather than a change in domestic growth conditions. Market impact is likely limited to Indonesian rates and FX, with broader spillover mainly through emerging-market sentiment.

Analysis

DBS economist Radhika Rao said Indonesia could see another 50 basis points of rate hikes in the second half if the rupiah weakens further and geopolitical tensions persist. The call implies a more hawkish policy path, driven by FX pressure and external risk rather than a change in domestic growth conditions. Market impact is likely limited to Indonesian rates and FX, with broader spillover mainly through emerging-market sentiment.