Chief Executive of the Supervision of Capital Markets, Financial Derivatives and Carbon Exchanges (PMDK) of the Financial Services Authority (OJK) Inarno Djajadi stated that his party was optimistic that the Fed’s interest rate cut would 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 a statement received in Jakarta, Sunday (6/10).
He said that when information about the Fed’s plan to lower interest rates began to emerge last July, investors were already pricing in in August and early September.
Also read: Majority of Equity Markets Strengthen Focus on US Inflation Announcements
The Fed’s reduction in interest rates by 50 basis points (bps) from 5.25-5.5% to 4.75-5% in mid-September was the first in the last four years.
Analysts also predict that the United States central bank will reduce interest rates again twice by the end of the year. “However, we hope that the optimism of capital market players must be balanced with caution,” said Inarno.
He asked investors to remain alert to potential volatility that may still occur due to developments in geopolitical tensions, global economic growth, as well as various domestic factors, such as economic and political developments.
Also read: BNI AM is optimistic that the capital market will achieve positive achievements this year
Previously, Chairman of the OJK Board of Commissioners, Mahendra Siregar, said that the stability of the financial services sector was maintained and financial markets were strengthening amidst positive sentiment due to the period of interest rate cuts (cut cycles) by central banks in various countries.
Even so, he said that financial services sector players still need to be alert and take necessary anticipatory steps due to weakening global economic performance, still high geopolitical tensions, and corrections in commodity prices which 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% to 6% on September 18. (Ant/N-2)
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