The probability of a 25 basis point interest rate hike by the US Federal Reserve in September 2026 has increased to 60 percent, according to Dimas Yusuf, Investment Director at Sucor Asset Management in Jakarta. Global market participants see potential benchmark interest rate increases through the end of 2026 following high US non-farm payroll data alongside inflation risks tied to the Middle East war.
Warsh leadership and policy guidance
Yusuf noted on 11 September 2026 that the direction of the US central bank’s policy remains full of uncertainty because the leadership era of Kevin Warsh does not provide policy guidance, even as market odds for monetary tightening firm up. Warsh provides no policy guidance.
A shift toward tighter monetary policy in Washington creates policy dilemmas for Bank Indonesia, which must balance external stability against domestic momentum. Higher US rates pressure the rupiah.
Implications for Bank Indonesia
The rupiah exchange rate faces direct implications from shifting expectations surrounding US interest rates, while policymakers in Jakarta weigh the spillover effects on broader domestic economic growth.
Bank Indonesia faces a delicate balance between currency defense and supporting economic activity as global market participants adjust expectations for borrowing costs through late 2026.
Related: Credit Agricole sees Polish rate hike to 4.00%
Source: Sucor Asset Management
