Jokowi Happy with Fed Rate Hike

President Joko “Jokowi” Widodo is happy with the recent US Federal Reserve decision to increase its benchmark interest rates after such a long uncertain wait, saying that the decision to gives positive signals to the Indonesian economy.

“This means there is certainty,” President Jokowi said on Thursday in Jakarta.

The US central bank on Wednesday raised the Federal Funds Rate by a quarter of a percentage point, the first such increase in nearly a decade. The decision ended a long period of uncertainty about when the Fed would begin winding down the easy money era that was ushered in to heal the economic damage of the 2008 financial crisis.

The Fed said in a statement after its latest meeting that it was lifting its key rate by a quarter-point to a range of 0.25 percent to 0.5 percent. Its move ends an extraordinary seven-year period of near-zero borrowing rates, but the Fed's statement suggested that rates would remain historically low well into the future, saying it expects "only gradual increases."

Jokowi said the government and also Indonesian monetary authorities needed certainty to make decisions related to the economy, hoping that the Fed’s decision can lead to a positive impact in Indonesian markets.

“I have been following the reactions from the capital market and money market since this morning and the results are positive,” Jokowi asserted.

The Federal Reserve's rate hike was also welcomed in Asia as a sign of strength in the US economy, a major market for the region's exports, but it might also bring difficulties by complicating Chinese efforts to avoid a sharper economic slowdown and keep the yuan steady.

Financial markets had ample time to adjust, yet the long stretch of near-zero interest rates makes the policy change "unprecedented," said economist Masamichi Adachi of JPMorgan in Tokyo.

"Beyond the market perspective, in the real economy, there are so many uncertainties," he said as quoted by the Associated Press, citing China's slowdown, the slump in oil prices, high levels of corporate debt in developing economies and other factor.

Source:, 17/12/15
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