Independent Economists Predict The Fed And BI Will Return To Pangkas Interest Rate

Head of economist PT Bank Mandiri Tbk (BMRI) Andry Asmoro. (Photo: Aris Nurjani/VOI)

SERANG Head of economist PT Bank Mandiri Tbk (BMRI) Andry Asmoro estimates that the Fed and Bank Indonesia (BI) will continue to cut the benchmark interest rate in the remainder of this year.

Asmo explained, based on the results of the consensus, the Fed will continue to cut the benchmark interest rate by 25 basis points (bps) in November and December 2024.

"This is based on consensus. This means that there will be at least 100 base points cut from the Fed Fund Rate this year. In total, it includes yesterday," he said in the media gathering of the Ministry of Finance 2024, Wednesday, September 25.

For information, on September 18, 2024, the Fed decided to cut the Fud Fund Rate (FFR) by 50 bps from 5.25 percent-5.5 percent to 4.75 percent-5 percent.

In line with cutting the interest rate of the United States (US) central bank, Asmo sees Bank Indonesia will also cut its benchmark interest rate by 25 bps in October 2024.

"We see that there is opportunity, BI has cut the benchmark interest rate again by 25 basis points. At least for the ahead the curve in October there is room and then cuts the benchmark interest rate again by 25 bps," he said.

To note, in the September 2024 Board of Governors' Meeting (RDG) BI cut BI-rate by 25 bps to 6 percent.

According to Asmo, this is based on BI's assessment results which show that domestic inflation levels are relatively low until the end of the year so that there is a BI-rate re-decreasing space taking into account relatively controlled domestic inflation conditions.

Even if inflation occurs in the remainder of this year, it will only occur in volatile food or volatile prices.

"With the FFR cut by 100 bps, at least there will be room then BI cut again at least 50 to 75 bps rate cuts in 2025 for BI," he said.