Indonesia's Central Bank Interest Rate Relatively High in ASEAN in November 2022

Russia's invasion of Ukraine caused a surge in global energy and food commodity prices, triggering high inflation in many countries. Amidst this situation, central banks worldwide have seemingly raced to raise their benchmark interest rates.

According to Trading Economics data, Myanmar's central bank interest rate reached 7% in October 2022. This is the highest among central banks in the Association of Southeast Asian Nations (ASEAN).

The next highest ASEAN central bank interest rate was Laos, at 6.5% in October 2022, followed by Vietnam at 6% and Brunei Darussalam at 5.5%.

Meanwhile, Bank Indonesia (BI)'s interest rate reached 5.25% in November 2022, ranking fifth highest in ASEAN. The BI7DRR (7-Days Reverse Repo Rate) benchmark interest rate increased by 50 basis points (bps) from the previous month.

The BI7DRR benchmark interest rate has increased four times this year. BI took this step to curb high inflation caused by rising energy prices, particularly the price of world oil, which briefly touched US$100 per barrel.

The Philippines' central bank interest rate reached 5% in November 2022, up 75 bps from the previous month. This was followed by Malaysia's central bank interest rate, which also rose 25 bps to 2.75%.

In contrast, Singapore's central bank interest rate fell 19 bps to 2.65% from the previous month. Thailand's central bank interest rate remained at 1% in October 2022, and Cambodia's central bank interest rate fell 2 bps to 0.73% in August 2022.

The high inflation rate in many countries was also fueled by the strengthening of the US dollar against six major world currencies, which also impacted the weakening of Asian currencies. As a result, the prices of energy and food commodities became more expensive due to increased import costs.