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View all search resultsBI holds rate despite seeing hawkish Fed stance
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Bank of Indonesia (BI) Governor Destry Damayanti (third left) poses for a photograph with BI's deputy governors on Wednesday ahead of the central bank's press conference to announce the results of its monthly policy meeting in Jakarta. (JP/Deni Ghifari)
B
ank Indonesia (BI) has kept its benchmark interest rate unchanged even though it expects the United States Federal Reserve to pursue a tight monetary policy.
Following the central bank’s monthly two-day policy meeting, BI Governor Destry Damayanti announced in a press conference on Wednesday that the BI Rate would remain at 5.75 percent, where it has stood since June.
Destry said the global outlook was “higher for longer” - a phrase used to define a sustained high interest rate environment - given the “high likelihood” of a rate increase from the Fed, though she did not add when the increase may happen.
BI’s decision comes a week before the Fed is to announce its rate policy in the Federal Open Market Committee (FOMC) meeting scheduled for Oct. 27 and 28.
CME Group’s FedWatch Tool showed on Wednesday that a majority of interest rate traders expect the Fed to keep its Federal Funds Rate unchanged in the upcoming meeting, but most expect a 25-basis point (bps) increase at the December FOMC meeting.
Indonesia’s monetary authority has hiked the interest rate three times from May to June, by a total of 100 bps, to halt a rapid depreciation of the rupiah amid global pressure on emerging market currencies.
