The Central Bank’s Complicated Choice
Monday, 20 June 2022
Bank Indonesia now must weather an entirely different financial storm compared to the previous two months. Three negative factors are working in tandem: rising inflation, rising Fed rates, and a volatile financial market.
LAST year, the Federal Reserve got its predictions wrong about inflation. The mantra of that time was that inflation would be temporary. As it turns out, inflation in the United States keeps climbing until the Fed has to hastily raise interest rates to suppress it. On Wednesday, June 15, the Fed rates went up by 0.75 percent, the largest rate hike since 1994. This is out of the initial plan, which slated a 0.5 percent increase.
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