2018.06.2906:38:00UTC+00Indonesia Hikes Key Rate By 50 Bps

Indonesia's central bank lifted its key interest rate by 50 basis points, on Friday, to combat the weakness in currency.

Bank Indonesia raised the 7-day reverse repo rate to 5.25 percent from 4.75 percent. The new rate will take effect on June 29.

This was the third rate hike in six weeks. Economists had forecast a marginal quarter point rate hike at this meeting.

The bank also raised the deposit and lending facility rates by 50 basis points to 4.50 percent and 6.00 percent, respectively.

The bank said the latest decision is pre-emptive, front-loading and ahead of the curve to maintain the competitiveness of domestic financial market. The central bank also vowed to strengthen future policy mix responses.

Global uncertainty stems from European Central Bank's decision to reduce asset purchases, China's reserve requirement reduction, rising oil prices and deteriorating US-China trade relations, the bank noted.

The bank cautioned that the uncertainty could feed through to broad the US dollar appreciation and trigger a capital reversal from developing economies, thereby prompting broad currency depreciation.