JAKARTA - The Chief Executive of the Capital Market, Derivative Finance and Carbon Exchange (PMDK) of the Financial Services Authority (OJK) Inarno Djajadi stated that his party is optimistic that the Fed's cut in interest rates will have a positive impact on the domestic capital market.
"We see that the Fed's interest rate policy will provide positive sentiment in the Indonesian capital market," said Inarno Djajadi in his statement, quoted from Antara, Monday, October 7.
He said that when information about the Fed's plan to lower interest rates began to be heard last July, investors had also conducted pricing in in August and early September.
The Fed's 50-base point (bps) rate drop from 5.25-5.5 percent to 4.75-5 percent in mid-September was the first time in four years.
Analysts also predict that the US central bank will lower its interest rate twice by the end of the year.
"However, we hope that the optimism of the perpetrators in the capital market must be balanced with caution," said Inarno.
He asked investors to remain aware of potential volatility that may still occur due to the development of geopolitical tension, global economic growth, as well as various domestic factors, such as economic and political developments.
Previously, Chairman of the OJK Board of Commissioners Mahendra Siregar said the stability of the financial services sector was stable and the financial market was strong amid positive sentiment due to the central bank's cut cycle period in various countries.
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Even so, he said that players in the financial services sector still need to be vigilant and take the necessary anticipatory steps due to the weakening of global economic performance, high geopolitical tension, and corrections to commodity prices that pose a risk of uncertainty.
Similar to The Fed, Bank Indonesia also lowered its benchmark interest rate or BI-Rate by 25 bps from 6.25 percent to 6 percent on 18 September.
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