BI's Latest Read: The Fed Will Raise Interest Rates To 5.50 In July 2023

BI Governor Perry Warjiyo (Photo: Doc. Antara)

JAKARTA Bank Indonesia (BI) responded in relation to the attitude of the central bank of the United States, The Federal Reserve aka The Fed, which is again in an aggressive (hawkish) tendency towards the determination of interest rates.

BI Governor Perry Warjiyo said that his party saw its own space for US central banks to raise the Fed Fund Rate.

"Our Fed Fund Rate will increase (to) 5.50 percent in July," he said during a press conference in Jakarta, Thursday, June 22.

According to Perry, the reading was based on the latest developments in the American economy as well as statements from the Governor of the Fed and other members.

In detail Perry explained that the current problem involving the US is the high demand side without being able to fulfill the supply aspect.

For example, a trade war with China that interferes with the smooth distribution of goods. Then the war in Ukraine hampered commodity supplies.

Moreover, high inflation occurs in the service sector. There used to be an immigration policy to supply labor, but now it is limited. That's why it takes longer for the effectiveness of the Fed Fund Rate to reduce inflation," he said.

Perry added that the urgency was also due to the failure of three valley silicon banks and other regional banks.

"This is where we originally estimated that the terminal will be 5.25 percent, there is a possibility that in July it will increase to 5.50 percent," he said.