Indonesia bank rate hike likely after inflationary pressures

The latest wave of coronavirus infections in Indonesia will now delay inflationary pressures until late 2022, and the central bank’s policy interest rate cannot be raised from record lows before then, its governor said on Monday.

“You’ll be seeing a long period of BI’s interest rates remaining low,” Governor Perry Warjiyo said in an online interview with Reuters, explaining Bank Indonesia needed to take a longer time winding back its ultra-loose monetary stimulus due to the spread of a highly infectious variant of the virus.

“Now with the spread of the Delta variant, the speed of the economic recovery is moved slightly later. This is why we won’t see inflationary pressure in early next year. Potentially, inflationary pressure will emerge at the end of next year.”