Indonesia raised the interest rate higher than analysts expected. It is because the country is experiencing economic inflation. What does this mean for their economy?
The United States has recently seen a jump in taxes to protect against inflation and the rising costs of goods caused by Russia invading Ukraine.
Fuel prices increased, and Bank Indonesia, Indonesia's central bank, responded with higher interest rates. It was to help lower inflation.
The Fed plans to lower the interest rate to bring inflation down. The Fed predicts that inflation will rise to nearly 6% this month. Joko Widodo has pledged to grow the economy.
This year, they have reached their goal of 7% growth.
Commodities-driven economies have only achieved 5 percent growth, and after the coronavirus pandemic struck in 2020, it plunged below that.
The government continues to tighten as no surprise and what economists call a "sizeable increase."
Moreover, inflation will happen until late 2023, so it might continue to draw.