Indonesia’s central bank raised its seven-day reverse repo rate in a precautionary move to combat inflation, which is expected to continue rising.
Bank Indonesia raised interest rates by 25 basis points to 3.75%, against estimates that expected no change.
The central bank also increased the overnight deposit facility by 25 basis points to 3%, while raising the lending facility by the same rate to 4.5%.
Inflationary pressures have increased, mainly due to high global food and energy prices, Indonesia’s central bank governor Perry Warjiyo said.
In July, the country’s consumer price index stood at 4.94%, up from 4.35% in June.
Inflation for 2022 and 2023 is at risk of exceeding the central bank’s upper limit of 2%-4%, indicating that stronger control measures are needed.
Source: Capital
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