Bank Indonesia Targets 2 More 25bp Hikes in 2026 as Waller Warning Lifts Dollar Above 99
Updated
Updated · cruxinvestor.com · May 26
Bank Indonesia Targets 2 More 25bp Hikes in 2026 as Waller Warning Lifts Dollar Above 99
5 articles · Updated · cruxinvestor.com · May 26
Two additional 25-basis-point Bank Indonesia hikes are now the base case for 2026, with policymakers seen defending the rupiah as Fed rate-hike expectations ripple through emerging markets.
Rupiah weakness at 17,785 per dollar and a DXY reading of 99.088 reflect support from Governor Christopher Waller's warning that US rate hikes remain possible, even though no new economic data prompted the shift.
That tightening logic hinges on the June 16 FOMC meeting under new Fed Chair Kevin Warsh, whose stated priority has been shrinking the Fed's $6.7 trillion balance sheet rather than raising rates.
If Warsh does not endorse Waller's hawkish stance, the dollar's post-warning premium could unwind below the 99.00 area, leaving Bank Indonesia and other EM central banks tightening against a Fed stance that never became policy.
Will new Fed Chair Warsh endorse hawkish rate hikes or stick to his balance sheet reduction plan this June?
Have emerging markets tightened policy too soon, betting on a Fed rate hike that may never arrive under the new Chair?