Indonesia’s central bank raised its key interest rate by 25 basis points yesterday following a spike in inflation caused by a government increase in the price of fuel.
Bank Indonesia’s third rate rise in three months took the benchmark rate to 8.75 percent and came as surging prices across Asia force the region to contemplate unpopular increases in borrowing costs.
“Bank Indonesia will continue to implement flexible, cautious and measured policies to tame inflation,” its governor Boediono said following the central bank’s policy meeting.
He said inflation could range between 11.5 percent and 12.5 percent by year’s end, before easing off to between 6.5 percent and 7.5 percent by the end of next year.
A 28.7 percent average jump in fuel prices in May and surging costs for food staples pushed year-on-year Indonesian inflation to 11.03 percent last year, official figures showed on Tuesday.
The year-on-year number was lower than forecasts of more than 12.5 percent because of a re-weighting of the figures to cut the impact of food prices. But the monthly rise from May was still the fastest in almost two years.
The stock market had factored in the rates rise and barely reacted to the bank’s move, but analysts expect that borrowing costs could rise as high as 9.5 percent by September.
The central bank’s move comes as Asia struggles to curb inflation amid record-high world crude oil prices and soaring food costs.
India recently moved to cool credit growth, raising its key short-term lending rate by half a percentage point after inflation hit a 13-year high of more than 11 percent.
Predictions that inflation figures to be released in the Philippines today could reach double figures have also raised expectations of a rate rise there.
WAITING GAME: The US has so far only offered a ‘best rate tariff,’ which officials assume is about 15 percent, the same as Japan, a person familiar with the matter said Taiwan and the US have completed “technical consultations” regarding tariffs and a finalized rate is expected to be released soon, Executive Yuan spokeswoman Michelle Lee (李慧芝) told a news conference yesterday, as a 90-day pause on US President Donald Trump’s “reciprocal” tariffs is set to expire today. The two countries have reached a “certain degree of consensus” on issues such as tariffs, nontariff trade barriers, trade facilitation, supply chain resilience and economic security, Lee said. They also discussed opportunities for cooperation, investment and procurement, she said. A joint statement is still being negotiated and would be released once the US government has made
Authorities have detained three former Taiwan Semiconductor Manufacturing Co (TMSC, 台積電) employees on suspicion of compromising classified technology used in making 2-nanometer chips, the Taiwan High Prosecutors’ Office said yesterday. Prosecutors are holding a former TSMC engineer surnamed Chen (陳) and two recently sacked TSMC engineers, including one person surnamed Wu (吳) in detention with restricted communication, following an investigation launched on July 25, a statement said. The announcement came a day after Nikkei Asia reported on the technology theft in an exclusive story, saying TSMC had fired two workers for contravening data rules on advanced chipmaking technology. Two-nanometer wafers are the most
NEW GEAR: On top of the new Tien Kung IV air defense missiles, the military is expected to place orders for a new combat vehicle next year for delivery in 2028 Mass production of Tien Kung IV (Sky Bow IV) missiles is expected to start next year, with plans to order 122 pods, the Ministry of National Defense’s (MND) latest list of regulated military material showed. The document said that the armed forces would obtain 46 pods of the air defense missiles next year and 76 pods the year after that. The Tien Kung IV is designed to intercept cruise missiles and ballistic missiles to an altitude of 70km, compared with the 60km maximum altitude achieved by the Missile Segment Enhancement variant of PAC-3 systems. A defense source said yesterday that the number of
Taiwanese exports to the US are to be subject to a 20 percent tariff starting on Thursday next week, according to an executive order signed by US President Donald Trump yesterday. The 20 percent levy was the same as the tariffs imposed on Vietnam, Sri Lanka and Bangladesh by Trump. It was higher than the tariffs imposed on Japan, South Korea and the EU (15 percent), as well as those on the Philippines (19 percent). A Taiwan official with knowledge of the matter said it is a "phased" tariff rate, and negotiations would continue. "Once negotiations conclude, Taiwan will obtain a better
RSS