Indonesia Could Be Affected by Increase in The Fed’s Rate: BI

TEMPO.CO, Jakarta - Bank Indonesia Governor Agus Martowardojo projected that the US Federal Reserve (The Fed) could increase its interest once this year rate after Federal Reserve Board Chair Janet Yellen testified before the congress.

"Yellen said to the congress that she wasn't too optimistic about adjusting the Fed Fund Rate. Earlier, we predicted that [the Fed Fund Rate] could be adjusted four times, and then later twice. Now, many people would think that it could be once," Agus said on the sidelines of a coordination meeting with the government in Kupang, East Nusa Tenggara, on Friday, February 12, 2016.

Earlier on Wednesday, February 10, 2016, Yellen indicated that The Fed would look at increasing the Fed Fund Rate further, but the risk of economic slowdown had postponed to action.

Yellen said that financial conditions in the US had recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and further appreciation of the US Dollar.

"These developments, if they persist, could weigh on the outlook for economic activity and the labor market, although declines in longer-term interest rates and oil prices provide some offset," Yellen added.

Yellen's statement had failed to offer a signal whether The Fed would adjust its interest rate in the next policy meeting on March 15 and 16, 2016.

Agus revealed that the statement could affect the global economy particularly of developing countries, including Indonesia.

"This certainly would have impacts [on the economy]. But the inflation rate remains stable at 4 percent plus minus 1 percent. That could be relieving for Indonesia," Agus added.

ANTARA

Source: Indonesia Could Be Affected by Increase in The Fed’s Rate: BI