Indonesia Central Bank Hikes Key Rate Further

(RTTNews) - Indonesia's central bank raised key interest rates for the fourth policy session in a row at its November meeting, in order to curtail elevated inflation and to strengthen the rupiah exchange rate.

The Board of Governors decided to raise the seven-day reverse repo rate, or BI rate, by 50 bps to 5.25 percent, the Bank of Indonesia said on Thursday.

The previous change in the BI rate was a 50 bps hike in October. Since August, Bank Indonesia has increased interest rates by 175 basis points.

The overnight deposit and lending facility rates were also raised by the same percentage, to 4.50 percent and 6.00 percent, respectively.

By increasing the interest rate structure on the money market, the bank expects to lower currently high inflation expectations, and ensure that core inflation returns to within the target range of 3.0 percent to 3.1 percent by early in the first half of 2023.

The latest data revealed that consumer price inflation eased to 5.71 percent in October from 5.95 percent in September.

Nonetheless, the inflation was well above the target corridor of 3 plus or minus one percent.

In the third quarter, Indonesia's economy grew by 5.72 percent annually, higher than the forecast and achievement in the previous quarter of 5.45 percent, supported by continued improvement in domestic demand and high exports.

The bank estimates economic growth this year to remain upwardly biased within the projection range of 4.5-5.3 percent.