Bank Indonesia surprises markets with aggressive rate hike

Bank Indonesia
Bank Indonesia has raised the benchmark interest rate three times in six weeks
Christopher Jeffery

Bank Indonesia has decided to raise its benchmark interest rate by a higher-than-expected 50 basis points and rolled out three macro-prudential policies in an attempt to stem local currency weakness while spurring growth.

The seven-day reserve repo rate is now 5.25%, up from 4.75%, after the two-day policy meeting ended today (June 29). Although a hike was widely expected, most analysts predicted a 25bp increase.

“The [rate hike] is Bank Indonesia’s pre-emptive, front-loading and ahead-of-the

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