Indonesia’s central bank raises rates again to curb inflation

Illustrative image (Photo: AFP)

Jakarta (VNA) - Bank Indonesia (BI) on November 17 raised its key interest rate by 50 basis points for a third consecutive month, saying it will enhance its response to "high" inflation expectations amid a strong economic backdrop.

BI Governor Perry Warjiyo told an online news conference that the "front-loaded" and "pre-emptive" move was aimed at anchoring inflation expectations and stepping up support for the rupiah.

While the global economy was slowing and some countries were facing recession risks, he said activity in Southeast Asia's largest economy was improving.

The central bank stuck to its forecast that growth will be at the upper end of its 4.5%-5.3% forecast range in 2022, adding GDP will be "high" next year.

With the move, BI has increased interest rates by a total of 175 bps since August, matching the scale of its last tightening cycle in 2018.

While Indonesia's inflation rate eased to 5.71% in October, it remained above BI's 2-4% target range for the fifth straight month and near a seven-year high of 5.95% in September.

Warjiyo said the market's current consensus forecast for end-2022 inflation of 5.9% was "too high" compared with BI's revised expectation of 5.6%. Core inflation was expected to peak at 3.7% in the first quarter of 2023, he said./.

VNA