Fed Policy Update — September 2026; the hike was about oil, and Indonesia pays twice

KEY HIGHLIGHTS

• The Federal Open Market Committee raised the federal funds rate by 25 basis points to 3.75 to 4.00 percent on 16 September, the first increase since 2023, on a unanimous 12 to 0 vote.
• The reason sits in one line of the August price data. Headline consumer prices in the United States rose 3.4 percent over the year while core prices rose only 2.4 percent. The entire gap is energy, which rose 16.3 percent.
• Indonesia already pays for that oil once. The oil and gas trade deficit runs at 2.90 percent of gross domestic product, and Pertamina was owed IDR 166.8 Tn at the end of August. The Fed decision now adds a second bill through the dollar.
• The cost shows up in the cushion. Indonesia’s policy rate after inflation sits 204bps above the United States in 2026 and falls to 110 basis points in 2027. Key watch: the Bank Indonesia Board of Governors meets on 22 and 23 September, and a cut there would spend a cushion that has already halved.

Regards, Aldiracita Research

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