{"id":31069,"date":"2026-03-19T04:00:05","date_gmt":"2026-03-19T04:00:05","guid":{"rendered":"https:\/\/www.vtmarketsglobal.com\/en\/uncategorized\/31069\/"},"modified":"2026-03-19T04:00:05","modified_gmt":"2026-03-19T04:00:05","slug":"uob-economists-say-bank-indonesia-held-rates-at-4-75-adopting-a-hawkish-stance-through-2026","status":"publish","type":"post","link":"https:\/\/www.vtmarketsglobal.com\/en\/live-updates\/31069\/","title":{"rendered":"UOB economists say Bank Indonesia held rates at 4.75%, adopting a hawkish stance through 2026"},"content":{"rendered":"Bank Indonesia kept its policy rate at 4.75% in March and moved to a more hawkish stance. UOB now forecasts the BI rate to stay at 4.75% through the end of 2026 and no longer projects any rate cuts in 2026.\n\nThe outlook shift follows Bank Indonesia\u2019s March meeting, which referred to the Middle East conflict as reducing expectations for global rate cuts. Bank Indonesia also removed earlier references to possible rate cuts, pointing to a longer period of steady rates.\n\n<h3>Policy Outlook And Market Implications<\/h3>\nBank Indonesia is expected to keep policy tight while staying data-dependent, with the Middle East conflict linked to rupiah weakness and higher inflation pressure. Bank Indonesia set out three scenarios for oil prices and conflict outcomes: base, moderate, and severe.\n\nFurther inflation risks include potential crop failures tied to warmer weather. The article notes it was produced using an artificial intelligence tool and reviewed by an editor.\n\nGiven Bank Indonesia&#8217;s unexpected shift to a hawkish hold, we must quickly unwind any positions that were betting on rate cuts this year. The market was pricing in at least one cut, so this pivot to a potential hike creates a new trading landscape. This means re-evaluating any short Rupiah positions, as the central bank is now clearly focused on currency stability.\n\nThe primary goal of this policy is to defend the Rupiah, which has been under pressure, recently touching 16,100 against the US dollar. With February&#8217;s inflation ticking up to 3.1% and Brent crude holding firm around $92 a barrel due to the Middle East conflict, the central bank&#8217;s stance is logical. We should therefore consider positioning for a stable or stronger Rupiah in the near term, possibly by selling out-of-the-money USD\/IDR call options.\n\nThis situation feels similar to what we observed back in 2022, when many traders underestimated the US Federal Reserve&#8217;s resolve to keep rates high to combat inflation. Those expecting a quick policy pivot were caught on the wrong side of the market. BI&#8217;s new language suggests a similar determination, meaning bets against the Rupiah are now fighting the central bank directly.\n\n<h3>Trading And Hedging Considerations<\/h3>\nThe uncertainty surrounding oil prices and conflict outcomes means implied volatility on USD\/IDR options is likely to rise. This presents an opportunity to buy volatility through structures like straddles if we anticipate a sharp move but are unsure of the direction. The central bank&#8217;s three scenarios for the conflict\u2014base, moderate, and severe\u2014tells us that they are prepared for significant market swings.\n\nFor traders with exposure to Indonesian bonds, this hawkish stance is a headwind, as it removes the prospect of capital gains from falling rates. In the interest rate swap market, this signals a good opportunity to pay fixed rates, anticipating that the floating rate benchmark will not fall as previously expected. Hedging against a surprise rate hike is now a more critical part of our strategy.\n\n<b><a href=\"https:\/\/www.vtmarkets.com\/trade-now\/\">Create your live VT Markets account<\/a>\u00a0and\u00a0<a href=\"https:\/\/myaccount.vtmarkets.com\/login\">start trading<\/a>\u00a0now. <\/b>\n<p>\r\n\r\n<p><strong>Start trading now &#8211; Click <a href=\"https:\/\/www.vtmarketsglobal.com\/en\/trade-now\/\">here<\/a> to create your real VT Markets account <\/strong> <\/p>\r\n<!-- \/wp:post-content -->","protected":false},"excerpt":{"rendered":"<p>UOB expects Bank Indonesia hold 4.75% through 2026, turning hawkish amid Middle East conflict, inflation.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-31069","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/31069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=31069"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/31069\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=31069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=31069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=31069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}