Indonesian Banks to Lower Credit Interest Rates in 2026

Factors Driving Rate Reductions

Indonesian banks are poised to significantly reduce credit interest rates in 2026, driven by multiple favorable conditions. The 125 basis point decrease in Bank Indonesia's benchmark rate over the past year has created substantial room for banks to lower their lending rates. Additionally, various liquidity incentives provided by BI through macroprudential liquidity measures for specific credit segments have further encouraged rate reductions.

Government Support and Additional Incentives

The government's decision to place Saldo Anggaran Lebih (SAL) funds in state-owned and regional banks has added to the liquidity support. Moreover, BI is offering additional incentives to banks that align their credit rates with the direction of the BI rate, with incentives reaching up to 0.5% of third-party funds (DPK) to reduce minimum reserve requirements.

Implications for Economic Growth

The anticipated decrease in credit interest rates is expected to stimulate economic growth by making credit more accessible and affordable for consumers and businesses. This move aligns with the broader monetary easing cycle and is supported by both monetary and fiscal policy measures.