BCA President Director Jahja Setiaatmadja Estimates The Fed Will Not Lower Interest Rates In The Near Future

President Director of PT Bank Central Asia Tbk (BCA) Jahja Setiaatmadja. (Photo: Doc. Antara)

JAKARTA - President Director (Presdir) of PT Bank Central Asia Tbk (BCA) Jahja Setiaatmadja estimates that the central bank of the United States (US) or the Fed will likely not lower the Fed Funds Rate (FFR) interest rate in the near future.

"If you look at the higher for longer, I believe that at least this year (the Fed's interest rate decline) will not happen in a short time. May or June, they will not lower interest rates," said Jahja during a virtual press conference in Jakarta, quoted from Antara, Tuesday, April 23.

Jahja said the high-interest rate scenario in the long term or higher for longer is more likely to occur considering the current US economy is quite good with a controlled unemployment rate even though inflation has not yet reached its target of 2 percent.

"So they (US) may this year also wait, whether December or even more extreme next year will start lowering interest rates," he said.

In addition, Jahja also reminded that the US will face a dilemma considering the United States (US) Treasury worth around 7 trillion US dollars is due this year. This is considered to add to the pressure on interest rates.

"If the interest or coupon offered is not very attractive, this could also be a question later who will buy the treasury bills. This is also one of the dilemmas that America will face," he said.

Jahja said the Fed interest rate maintained at a high level could not only have an impact on Indonesia but also the world.

Other countries, he added, would also be difficult to lower interest rates if the Fed continued to maintain at the level of 5.25-5.50 percent.

"It will be risky if the US interest rate does not go down, other countries that lower interest rates will weaken their currencies. Unless they have a trade strategy with larger exports," said Jahja.