The Fed Will Cut Interest Rates, Sri Mulyani Says The World's Toughest Time Has Been Passed

Minister of Finance Sri Mulyani. (Photo: Doc. ANTARA)

Minister of Finance Sri Mulyani Indrawati conveyed the signal of easing the interest rate from the Fed to a positive catalyst for the current global economy.

"This gives the least hope that optimism will arise because of the situation, meaning that the worst shock from the increase in interest rates has been passed," he said at the Indonesian Economic Outlook Seminar, "said Sri Mulyani at the Seminar Outlook for the Indonesian Economy, Friday, December 22.

For information, the Fed hints that there will be 3 times the rate cut which is estimated to start in March 2024. The Fed maintains interest rates on Thursday, December 14, 2023, in the range of 5.25 percent - 5.5 percent.

Sri Mulyani estimates that the Fed's policy interest rate will fall in the second half of 2024, thereby easing uncertainty in the global financial market. Previously, the US Central Bank was predicted to maintain its interest rates for a very long time.

"For 2024, if the interest rate situation is high and lasts a while, now how long is the discussion taking? Some say 24 months, 18 months, and now it's even shorter," he said.

Sri Mulyani conveyed that the increase in terms of various interest rates in developed countries, including the Fed, which increased dramatically to 500 basis points, gave a big shock, not only in the country but also for the global.

Even international agencies expect a significant Fed rate hike to impact the US into a recession, even the global economy is expected to go dark.

However, the current condition of the US economy is starting to slowly improve, reducing the risk of the global economy from previous estimates.

Sri Mulyani said that the current global risk to watch out for is China's economic slowdown.

"This phenomenon is marked by the bankruptcy of the property giant Evergrande which is considered to have an impact on the global economy. In addition, the fragmentation of the global economy and geopoliticals will also continue to be watched out for," he said.