Key insights
- Bank Indonesia unexpectedly raised interest rates by 50 bps, signaling a shift towards tighter monetary policy in emerging markets. While the direct impact on US equities is limited, it reinforces concerns about global inflation and potential capital outflows from emerging markets, which could indirectly affect US multinational companies and investor sentiment.
JAKARTA, May 20 (Reuters) - Indonesia’s central bank raised its policy interest rates for the first time in two years at a policy review on Wednesday.
Bank Indonesia (BI) hiked its benchmark 7-day reverse repurchase rate by 50 basis points to 5.25%.
Sixteen of 29 economists in a Reuters survey had expected a 25-basis-point increase, while the rest had expected no change.
BI also raised its overnight deposit facility and lending facility rates by the same amount, to 4.25% and 6.00%, respectively.