TEMPO.CO, Jakarta - The vast majority of market agents believe that the Federal Reserve will continue to observe extra caution and tighten its monetary policy by raising its benchmark rate, Bank Indonesia (BI) said.

Deputy BI Senior Governor Mirza Adityaswara stated here on Friday that the US economic development, which is far below expectations, suggests that the Fed will raise its rate only once this year to 0.5 percent from the current level of 0.25 percent.

The Fed last tightened its monetary policy in 2015.

"I note that the vast majority of market players believe the Fed will raise its rate very carefully," he added.

The vast majority of market agents perceived that the Fed will tighten its monetary policy between September and December 2016, he pointed out.

If the Fed raises its rate only once this year, its impact on the Indonesian economy can be anticipated, he noted.

"It doesnt matter if it is to be raised only once," he assured.

The Fed Governor, Jannet Yellen, is scheduled to deliver a speech at an annual meeting with monetary experts in Jackson Hole Symposium later this week.

Market agents are awaiting the speech that is expected to send a signal about the US monetary policy for the rest of 2016.

The executive director of Economic and Monetary Policy Department of Bank Indonesia, Juda Agung, said the "wait-and-see" attitude on the part of market agents prior to the Fed governors speech has triggered the rupiahs slide against the dollar.

However, the rupiahs depreciation is still reasonable and relevant to fundamental reflection, he observed.

According to the Jakarta Interbank Spot Dollar Rate (Jisdor), the rupiah has moved at a psychological level of Rp13,200 per dollar since Tuesday after continuing its rally at Rp13,100 per dollar.

The rupiah fell slightly by one point to Rp13,222 per dollar on Friday, compared to Thursday evening.

ANTARA