Bank Indonesia responds to the Fed's rate hike

REPUBLIKA.CO.ID, JAKARTA — Deputy Governor of Bank Indonesia (BI) Ronald Waas said, the decision of the United States central bank (the Federal Reserve) to raise interest rates would cause too much turmoil in the markets. Therefore, this increase had been predicted by market participants and world authorities.

“Market participants have been anticipating for a long time. The world is also preparing well, so that it takes place as if there was nothing,” said Ronald, at Ministry of Finance office, Jakarta, Thursday (17/12).

The Fed’s decision to raise interest rates by 25 basis points which will be increased gradually over the next year, would provide certainty for market participants. The level of speculation would be reduced.

“I think in general, the decision will reduce uncertainty,” Ronald added.

The US central bank, the Fed, raised interest rates for the first time in nine years, after seven years of near 0 percent. The Fed raised interest rates from a range of 0-25 percent to 0.25 percent-0.50 percent on Wednesday (16/12).

The interest rate hike was responded well by US banks by raising its interest rates. After the Fed decision came out, US stocks closed higher. Meanwhile, the rupiah strengthened slightly against the US dollar, though remained at Rp 14,000 per US dollar.

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