JAKARTA :Indonesia's central bank announced on Thursday a surprise 300 basis points of staggered hikes in the reserve requirement ratio for banks over the next eight months, in one of its first concrete signs of monetary tightening.
"For the time being our focus is on maintaining stability amid normalisation by the Fed, while at the same time supporting the economic recovery," he said in an online news conference. Since 2020, BI had cut interest rates by 150 bps and injected a total of 874.4 trillion rupiah to cushion the economic fallout from the COVID-19 pandemic.
BI has had to adjust its policy in the past when the Fed tightened because the rupiah is among Asia's most risk sensitive currencies and vulnerable to capital outflows. Radhika Rao, a DBS economist, said with BI's"hawkish underpinnings", markets will likely bring forward and increase rate hike expectations for this year.
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