Global Central Banks Predicted to Maintain High Interest Rates

The Chair of the Financial Services Authority (OJK) Board, Friderica Widyasari Dewi, stated that global central banks are expected to continue maintaining high interest rates amid global uncertainties due to geopolitical tensions in the Middle East. This is because such conditions have driven surges in energy prices and increased volatility in global financial markets.

“High global uncertainty and energy price pressures also narrow the monetary policy space for global central banks, while reigniting expectations of ‘higher for longer’,” said Friderica during an online press conference on Monday, 6 April 2026. “Higher for longer” refers to the situation where global central banks maintain high interest rates for a longer period.

Friderica said the US economy is showing signs of strain amid inflation and surging unemployment rates. She noted that following the escalation of conflict in Iran, markets expect that the US central bank, or the Federal Reserve, will not cut interest rates this year.

According to Friderica, the escalation of conflict in the Middle East has the potential to increase risks to the financial sector through three main channels: financial markets, rising energy prices, and trade.

She mentioned that OJK is encouraging financial services institutions to conduct further assessments and strengthen anticipatory measures, including enhancing risk management as well as maintaining adequate liquidity and capital.

In addition, OJK will continue to monitor market movements and coordinate with Self-Regulatory Organisations. “We assess that several policies to maintain stock market stability remain relevant, namely share buybacks without general meetings of shareholders, delays in implementing short selling transaction financing, trading halt policies, and auto rejection limits,” said Friderica.