G20 members agree to minimise impacts of Fed’s raising interest rates

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G20 finance leaders have agreed on realising a well calibrated, well planned, well communicated normalisation in the monetary policy to minimize the impacts of the US Federal Reserve’s raising interest rates.

The consensus was made on Friday evening during the second day of the G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in Jakarta, with Indonesia serving as the host country, reports Xinhua news agency.

Bank Indonesia’s Governor Perry Warjiyo told a press conference that developed countries should ensure that the normalisation policy only posed minimum impacts to the global financial market and that it did not pose any spillover effect to developing countries.

“This is an urgently important thing to do, so that the global economy can return to a long-term growth and the scar caused by the Covid-19 pandemic can be healed faster,” Warjiyo said.

The Federal Reserve has recently said that the central bank would have to raise interest rates up “more aggressively”, expecting “four, maybe five hikes” this year, which was expected to impact the debt condition or the financial stability of other countries, especially emerging economies.

Indonesia’s central bank has also moved to curb inflation, including by promoting the use of local currency settlement in cross-border trade and investment, as an effort to reduce dependency on the US dollar.

Warjiyo said that the FMCBG meeting also discussed broader issues related to the global financial sector, risks in global supply chains and energy issues.

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