Beware the Effects of a Narrowing Interest Gap

Reporter: Nur Qolbi, Ridwan Nanda Mulyana | Editor: Narita Indrastiti | Translator: Tiyas Widya Septiana

KONTAN.CO.ID - JAKARTA.  The direction of interest rates at a number of central banks will still determine financial market movements in the coming weeks. What is of concern to the domestic market is that the interest rate difference between Bank Indonesia (BI) and the United States Federal Reserve is narrowing.

At the BI Board of Governors (RDG) Meeting, which was held on August 23–24, 2023, a number of economists and financial analysts projected that BI would maintain its benchmark interest rate. As a result, the distance between the Fed's reference rate and BI's 7-day reverse repo rate