JAKARTA, Dec.24 (Reuters) – Indonesian bond rates could rise by 50 basis points (bps) as early as the third quarter of next year, the central bank chief said on Friday, to match an expected rise of 50 basis points (bps). at 75bp in The Treasury reports as the US tightens monetary policy.

The comments from Perry Warjiyo, the governor of the Bank of Indonesia (BI), came after the Federal Reserve this month announced it would end bond buying during the pandemic in March, paving the way to three rate hikes of a quarter of a percentage point each by the end of 2022. read more

“The impact of the Fed Funds rate hikes… ultimately pushes the UST (yields) up to between 50 and 75bp. Most likely 50bp,” Warjiyo said in an online seminar with economists.

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“If the UST rises by 50bp, of course, our national sovereign bond yields will need to adjust by around 50bp.”

He added that the BI would ensure that the rupee remains stable despite the global monetary tightening and pledged to continue its so-called triple intervention strategy in the spot foreign exchange, bond and undeliverable domestic futures markets.

The rupee is among the best performing emerging Asian currencies of the year, thanks to Indonesia’s large trade surpluses, boosted by the commodities super-cycle. But it is also one of the most risk-sensitive in the region.

Domestic inflation could start to rise in the third quarter, Wariyo added. He reiterated the bank’s commitment to keep interest rates at record highs until inflation starts to heat up. Read more

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Reporting by Gayatri Suroyo; Editing by Clarence Fernandez

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