Indonesia: BI seen raising rates to 4.50% by year-end – UOB

Economist at UOB Group Enrico Tanuwidjaja comments on the latest interest rate decision by the Bank Indonesia (BI).

Key Takeaways

“Bank Indonesia (BI) raised its benchmark rate (7-Day Reverse Repo) to 3.75% at its Aug MPC.”

“BI unexpectedly raised borrowing costs for the first time since 2018 amidst mounting inflation risks.”

“We keep our view for BI to continue hiking in months to come with three more 25bps hikes in 2H22, taking its benchmark rate to 4.5% by the end of 2022.”