Jakarta [Indonesia], August 24: Indonesia's central bank, Bank Indonesia, raised on Tuesday the benchmark interest rate by 25 basis points to 3.75 percent, considering a disrupted economic recovery amid inflation and monetary policies in several countries.
The central bank also raised the deposit facility interest rate by 3 percent, and lending facility interest rate by 4.5 percent.
The rate hikes were in line with the expectations of most Indonesian financial analysts.
Bank Indonesia Governor Perry Warjiyo said in a press conference that global economic recovery would run slower than expected as global inflation remained high and the conflict between Russia and Ukraine was still ongoing.
"There may be an increased risk of stagflation and heightened financial market uncertainty as prices of energy and food keep increasing. The global trade volume is also expected to be lower than before," Warjiyo said.
Local media quoted Indonesian analysts as saying that the higher rate was urgently needed to anticipate global and domestic sentiments, including currency war, the potential for an increase in the Fed's interest rates and, in the domestic market, the potential for a spike in fuel prices.
Source: Xinhua
