TEMPO.CO, Jakarta - Bank Indonesia (BI) had just decided on another interest rate hike; raising the 7 Day Repo Rate (7DRRR) by 25 bps to 5.50 percent. Economists are saying that this is a hasty policy by the central banks.
Center of Reform on Economics (CORE) economist Piter Abdullah said that this recent hike shows how BI is not confident in addressing pressures on the rupiah from increasing current account deficits and situations in Turkey.
Read: Bank Indonesia to Keep Current Account Deficit Below 3 Percent
Piter told Tempo on Aug. 15 that he is concerned investors will interpret BI’s move as being hasty, since The Fed won't raise their rates until next month.
The central bank’s board of governors meeting resulted in another 7DRRR hike to 5.50 percent. The deposit rates and lending rates are also raised by 25 bps each to 4.75 percent and 6.25 percent, respectively.
Bank Indonesia Governor Perry Warjiyo said the decision was consistent with efforts to keep the domestic financial markets attractive to investors and to curb the current account deficit down to a safe limit.
HENDARTYO HANGGI | KARTIKA ANGGRAENI
