Jakarta. Bank Indonesia (BI) increased the benchmark BI-Rate by 25 basis points to 6.25 percent, citing escalating geopolitical tensions in the Middle East and high interest rates in the US, causing the rupiah to weaken.

During its Board of Governors Meeting on April 23-24, the central bank also raised the Deposit Facility rate to 5.5 percent and the Lending Facility rate to 7 percent.

"This rate hike aims to strengthen the rupiah exchange rate amid worsening global risks and to ensure inflation remains within the target of 2.5 plus-minus 1 percent in 2024. It is in line with our pro-stability policy stance," said BI Governor Perry Warjiyo during a press conference after the monthly Board of Governors Meeting on Wednesday.

This is the first interest rate hike since October 2023 and was contrary to analysts' expectations.