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Indonesia surprises with 50bp hike

Bank predicts Fed tightening in 2027 as it continues to battle rupiah weakness

Bank Indonesia
Christopher Jeffery

Indonesia’s central bank surprised observers with a 50 basis point rate hike today (May 20), and said it expected the US to tighten monetary policy next year.

In its first tightening since March 2024 and its first policy adjustment since last October, the Bank Indonesia (BI) board decided to raise the benchmark lending rate to 4.25%. In a statement, it said it had taken the decision in order to strengthen the rupiah amid “global turmoil” caused by the Middle East conflict and to keep inflation

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