BI Estimates The Fed's Interest Rate Will Drop In December 2024

JAKARTA - Senior Deputy Governor of Bank Indonesia (BI) Destry Damayanti estimates that the policy interest rate for the United States (US) Federal Reserve or The Fed will fall in December 2024.

"This is in accordance with our expectations, yes. Anyway, we have also anticipated that the Fed will lower interest rates, our expectations are indeed more conservative in December," Destry told media crews in Jakarta, quoted from Antara, Thursday, August 1.

If the Fed's interest rate, the Fed Funds Rate (FFR) could drop earlier in September 2024, then it would be a good thing so that high-for-longer sentiment or high-interest rates for longer periods could gradually fall.

"If, for example, the Fed can go down quickly in September, it should be better, so that the high for longer situation can gradually go down," he said.

Earlier, analyst Finex Brahmantya Himawan said the market had fully estimated a 25 basis point (bps) FFR rate drop in September 2024 for some time, with US central bank Governor Jerome Powell saying policymakers are not considering a 50 bps drop in interest rates at this time.

This is a breath of fresh air and a sign of cutting interest rates in September 2024 which can result in strengthening the rupiah over the US dollar.

According to Powell, if inflation moves down, more or less in line with expectations, growth remains strong enough, and the labor market remains consistent with current conditions, then he thinks lower interest rates could be taken into consideration at a September meeting.