TEMPO.CO, Jakarta - Bank Indonesia (BI) Governor Agus Martowardojo said that the US Federal Reserve or The Fed would likely to raise the Fed Fund Rate this month.
"The probability is no longer 94 percent, but it's already 100 percent. The Fed Fund Rate is predicted to increase by 25 percent," Agus said at the Finance Ministry’s office in Jakarta on Friday, March 10, 2017.
The decision to raise the Fed Fund Rate will be announced after the Fed holds a monthly meeting of the FOMC meeting on March 14 and 15. Agus revealed that the decision will cause an appreciation for the US dollar and depreciations for a number of other currencies, including the Indonesian rupiah.
However, Agus viewed that the domestic economic condition is generally well-maintained as reflected by the economic growth, inflation rate, trade balance, and foreign exchange reserves.
"The fiscal management effort is good, so funds are still flowing into Indonesia," Agus explained.
Agus revealed that the amount of foreign capital inflow by the second week of March reached Rp31 trillion (US$2.3 billion). Based on a consumer survey conducted by BI, the inflation rate in the second week of March stood at around 0.18 percent, which was lower than that in the first week.
Agus added that BI remains optimistic although the Fed will soon raise the Fed Fund Rate, since the national economy will remain strong in the future.
Agus said that BI will focus on monitoring the global sentiments due to the French Election and the China’s economic growth which was reported to reach 6.5 percent. In addition, oil prices that hit USD 50 per barrel have remained stable as the US increased oil stocks and productions.
GHOIDA RAHMAH
