Indonesia's surprise interest rate hike

The Central Bank of Indonesia raised its policy rate by 25 basis points to 3.75 percent. Economists had expected the rate to remain unchanged. Indonesia made an unexpected rate hike to combat the weakening of its currency and inflation. The Central Bank of Indonesia raised its policy rate, the 7-day reverse repo rate, by 25 basis points to 3.75 percent. Economists had expected the bank to keep the policy rate unchanged at 3.50 percent. With the latest decision, the bank has made its first rate hike since January 2021. The upward momentum in inflation in Indonesia continued in August. The latest data showed that inflation in the country reached a 7-year high of 4.94 percent.