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Indonesia raises policy rate to 3.75% as inflation speeds up

Central bank's first hike since 2018 follows tightening by U.S., ASEAN neighbors

The hike comes as the Indonesian economy has yet to fully recover from the effects of COVID-19. (Photo by Ken Kobayashi)

JAKARTA -- Indonesia's central bank raised its benchmark interest rate on Tuesday for the first time nearly in four years amid concerns over rising inflation due to the war in Ukraine and aggressive tightening by the U.S. Federal Reserve and neighboring central banks.

Bank Indonesia hiked its seven-day reverse repurchase rate to 3.75% from 3.5% -- its first increase since November 2018, when the benchmark stood at 6%, surprising many analysts.

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