Bank Indonesia (BI) is developing a new incentive framework designed to keep banking credit rates stable, particularly during periods when the central bank’s benchmark interest rate is on the rise.
Dhaha P. Kuantan, Director of the Macroprudential Policy Department at BI, explained that this initiative aims to ensure the effective transmission of monetary policy to the credit sector without hindering financing growth. According to current data, banking credit rates have maintained a downward trend, falling from 9.03% in March to 8.95% in April 2026.
“We are continuing to see a downward trend that aligns with the transmission of the BI Rate,” Dhaha stated in Makassar, South Sulawesi, on Sunday (May 24). He attributed this decline to the lag effect of monetary policy on the banking industry.
Read also:
- BI Prepares New Bank Incentive Scheme to Manage Credit Rates
- Wall Street Gains as Treasury Yields Ease Amid U.S.-Iran De-escalation Hopes
- JCI Forecasted for Consolidation; AMRT, ANTM, and AKRA Shares Recommended
Previously, BI designed the Macroprudential Liquidity Incentive (KLM) policy to accelerate the transmission of BI Rate adjustments into lower credit rates. Moving forward, the central bank plans to shift its approach by calculating incentives based on the spread between the BI Rate and individual bank credit rates.
Under this new scheme, banks that refrain from aggressively raising their credit rates when the BI Rate increases will be eligible for incentives from BI. “When the BI Rate rises, banks that keep their credit rate hikes manageable will certainly receive incentives,” Dhaha noted.
The central bank expects this policy design to keep credit interest rates under control, thereby sustaining credit demand and broader economic growth. “The goal is to ensure that even if the BI Rate climbs, credit rate increases remain manageable so that the transmission to credit growth continues to function smoothly,” he added.
For context, Bank Indonesia recently raised its benchmark interest rate by 50 basis points (bps) to 5.25%. This decision was finalized during the Board of Governors Meeting held on May 19-20, 2026.
Summary
Bank Indonesia is developing a new incentive framework to maintain stable banking credit rates even when the benchmark interest rate rises. By calculating incentives based on the spread between the BI Rate and individual bank credit rates, the central bank aims to ensure that credit costs remain manageable for borrowers. This initiative builds upon the existing Macroprudential Liquidity Incentive policy to support sustained credit demand and economic growth.
Recent data indicates that banking credit rates have shown a consistent downward trend, dropping from 9.03% in March to 8.95% in April 2026. This decline reflects the ongoing transmission of monetary policy within the banking industry. To further stabilize the market, Bank Indonesia intends to reward banks that avoid aggressive interest rate hikes following the recent 50 basis point increase to the benchmark rate.
