Corporate Indonesia braces for inflationary headwinds

INDONESIAN corporations are bracing for a sharp hike in interest rates in the fourth quarter of this year as inflation continues to spike.

Although Bank Indonesia (BI), the country’s central bank, bucked the global trend of raising interest rates by keeping its benchmark rate unchanged a fortnight ago, economists and market analysts told The Business Times that they expect rates to rise later in the year.

Indonesia’s inflation rose to a 5-year high of 4.4 per cent in June. This has prompted concern among business leaders and market analysts as they fear that inflation may be much higher given the way it is calculated.