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BI calls for anticipating hike in Fed interest rate
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Bank Indonesia headquarters on Jl. MH Thamrin, Central Jakarta (JP/Wienda Parwitasari)
B
ank Indonesia Governor Agus Martowardojo has called on all stakeholders in the country to prepare themselves ahead of the coming interest rate hike in the United States and other developed countries.
Agus said in Jakarta over the weekend that the central bank was following the latest developments in the United States, where it expected the Federal Reserve would increase its rate three times this year in March, June and December.
The BI was also monitoring the effects of the ongoing balance sheet normalization and the recent tax cuts in the US, said Agus.
It was also taking into account the latest geopolitical developments in the Middle East, Europe and in the Korean Peninsula, as well as the rising core inflation in developed countries, he said.
Agus added that Indonesia needed to maintain its strong economic fundamentals and the stability of its macroeconomic and financial systems to anticipate the external pressures.
Read also: Fed rate, Trump tax reform and Indonesian economy
“We need to remain watchful of the possibility of increased interest rates in developed countries, which could affect developing countries like Indonesia,” he said.
Agus added that the central bank would be discussing the latest developments in the next board of governors meeting in February to formulate its policy response.
The central bank has decided to keep its interest rate at 4.25 percent in January, saying that the rate was in keeping with Indonesia’s macroeconomic stability and would support economic recovery. (bbn)
