Sri Mulyani Beware of Rising US Inflation That Is Still High and Makes The Fed More Hawkish

Minister of Finance Sri Mulyani. (Photo: Doc. Antara)

JAKARTA - Minister of Finance, Sri Mulyani, is wary of rising inflation in the United States (US) which is still high so that in the end it will make the US Central Bank, The Fed, more hawkish in its monetary policy.

"We just saw last night the US inflation rate was at the level of 8.3 percent on an annual basis in August 2022, which caused a negative reaction", Sri Mulyani said at a Working Meeting with the House of Representatives Budget Agency in Jakarta, quoted by Antara, Wednesday, September 1.

He said that the negative reaction occurred because the increase in inflation in Uncle Sam's country did not only occur in consumer price index (CPI) inflation but also increased core inflation.

The US Department of Labor reported Tuesday that the country's CPI rose 0.1 percent every month in August 2022, for an 8.3 percent year-on-year increase.

Core inflation, which excludes food and energy, rose 0.6 percent every month and 6.3 percent on an annual basis. This figure is higher than market expectations.

Therefore, Sri Mulyani will continue to monitor global conditions because they have the potential to affect Indonesia's three macro assumptions going forward, namely economic growth, inflation, and the rupiah exchange rate, especially in 2023.

"Of course, it is necessary to continue to observe and anticipate if global shocks move in an unpredictable direction", she said.

As for 2023, he continued, economic growth is targeted to reach 5.3 percent.

The target is in the hope that the world situation will not worsen, both in terms of security, geopolitics, and the impact of global economic performance due to the increase in the world central bank's benchmark interest rate, which is estimated to be higher and faster.