Bank Indonesia faces mounting pressure to hike after MSCI threat fuels market rout

Destry Damayanti, governor of Bank Indonesia, during a news conference with Suahasil Nazara, Indonesia's finance minister, at the central bank's headquarters in Jakarta, Indonesia, on Thursday, Sept. 24, 2026.Bloomberg | Bloomberg | Getty ImagesBank Indonesia faces mounting pressure to raise interest rates on Wednesday as economists revise their forecasts after global index provider MSCI warned it may downgrade the country's stock market from emerging-market status, setting off a selloff in stocks and the rupiah.Citibank now expects a pre-emptive 50 basis-point increase to 6.25%, abandoning its earlier call for no change. Capital Economics and Permata Bank expect a 25 basis-point hike to 6%. The central bank has held its benchmark seven-day reverse repurchase rate at 5.75% since June. MSCI said Friday it is considering moving Indonesia to "standalone" from the emerging-market status it has held since 1989, causing the Jakarta Composite Index to suffer the worst two-day sell-off recorded, before recovering about 3% Tuesday after authorities announced steps to improve market transparency and price discovery, including expelling tightly held companies from the flagship index. Meanwhil...