JAKARTA - Bank Indonesia (BI) estimates that the reduction in the United States (US) benchmark interest rate or the Fed Fund Rate (FFR) will be faster than previously projected at the end of 2024.
BI Governor Perry Warjiyo said the estimate came from US inflation in June 2024 being lower than expected, influenced by declining energy and housing inflation.
"This encourages the forecast for a reduction in the US policy interest rate (Fed Funds Rate/FFR) to be faster than previously projected at the end of 2024," he explained in a press conference, Wednesday, July 17.
Meanwhile, Perry said that the need for US debt is still high along with the wide deficit, and causing the 10-year US Treasury yield to remain high.
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According to Perry, the uncertainty of the global financial market is still high and geopolitical tensions have not subsided, resulting in relatively limited capital flows to developing countries.
"This development implies the need to continue strengthening policy responses to mitigate the negative impacts of the spread of global uncertainty to the economies of developing countries, including Indonesia," he said.
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