Indonesia's central bank kept interest rates unchanged on Wednesday, a move that defied market expectations of another hike after two consecutive increases to support the rupiah.

Bank Indonesia held its 7-day reverse repurchase rate at 5.75 percent, while 20 out of 33 economists polled by Reuters had expected a 25 basis point hike, with the rest predicting no change.

The bank also maintained its overnight deposit facility rate at 4.75 percent and its lending facility rate at 6.50 percent.

Bank Indonesia has raised interest rates by a total of 100 basis points since May, in an attempt to attract foreign investment inflows and support the rupiah, which has come under pressure due to concerns about the country's fiscal position, the central bank's independence, and controversial policies related to commodity exports.

Bank Indonesia Governor Perry Warjiyo said during an online press conference that the decision is in line with the bank's efforts to maintain currency stability and keep inflation within the target range, while relying on other tools to support economic growth.

Ahead of the press conference, the rupiah was stable at 17,898 per dollar. Since falling to a record low of 18,190 per dollar on June 8, the currency has seen limited improvement, but continued to trade near the 18,000 level.

In addition to domestic pressures, the war in Iran and its impact on oil prices have led to capital outflows from Indonesia, which is a net oil importer.

Several central banks in emerging and developed markets around the world have begun raising interest rates to counter inflationary pressures stemming from Middle East turmoil.

Warjiyo expressed confidence that Indonesia's inflation rate will remain within the central bank's target range of 1.5 percent to 3.5 percent until 2027, despite the weak rupiah.

Inflation rose in June to its highest level in three months, reaching 3.34 percent, due to higher prices of non-subsidized fuel. Analysts have warned that prices could face further pressure in the coming months due to potential disruptions in food production from unusual drought linked to the El Niño climate phenomenon.