{ "success": true, "data": { "id": 1615771, "msgid": "rising-tensions-before-holiday-11-central-banks-meet-as-budget-deficit-risk-grows-1773618768", "date": "2026-03-16 06:20:00", "title": "Rising Tensions Before Holiday: 11 Central Banks Meet as Budget Deficit Risk Grows", "author": "", "source": "CNBC", "tags": "", "topic": "Economy", "summary": "Global financial markets face significant headwinds as eleven central banks, including the US Federal Reserve and Bank Indonesia, hold policy meetings this week amid escalating geopolitical tensions in the Middle East and rising oil prices. Indonesia's government warns that the state budget deficit could exceed the legal 3% limit if the Iran conflict persists and oil prices remain elevated, presenting policymakers with difficult choices between maintaining growth and fiscal discipline. Bank Indonesia is expected to maintain its policy rate at 4.75% whilst external debt continues to rise modestly, reflecting broader concerns about stagflation risks and currency stability in emerging markets.", "content": "

US STOCK MARKET TURMOIL<\/p>\n

Wall Street collapsed in the final trading session of last week on\nFriday (13 March 2026). The market downturn followed rising oil prices\nas investors awaited developments regarding the Iran conflict.<\/p>\n

The S&P 500 fell 0.61% and closed at 6,632.19, whilst the Nasdaq\nComposite dropped 0.93% to end at 22,105.36. The Dow Jones Industrial\nAverage declined 119.38 points, or 0.26%, to 46,558.47.<\/p>\n

The S&P 500 marked a new low for 2026 on Friday, recording a 1.6%\ndecline over the week and marking three consecutive weeks of losses\u2014the\nfirst such occurrence in approximately one year. The Dow Jones fell\nroughly 2% over the week whilst the Nasdaq weakened 1.3%.<\/p>\n

MIDDLE EAST TENSIONS DRIVE OIL PRICES<\/p>\n

Stock markets weakened further following pressure from rising oil\nprices. The surge followed Iran\u2019s new Supreme Leader, Mojtaba Khamenei,\ndeclaring that the Strait of Hormuz, a critically important energy trade\ncorridor, should remain closed as a tool to pressure adversaries.<\/p>\n

Shipping traffic in the Strait of Hormuz has been nearly halted since\nthe United States and Israel launched strikes against Iran in late\nFebruary, leaving investors anxious about further developments in the\nconflict.<\/p>\n

On Friday, however, US Defence Secretary Pete Hegseth dismissed\nconcerns that the closure would become a prolonged problem.<\/p>\n

STAGFLATION FEARS AND RATE EXPECTATIONS<\/p>\n

Wall Street fears that rising oil prices could trigger\nstagflation\u2014high inflation coupled with sluggish economic growth. These\nconcerns have prompted investors to reduce expectations for interest\nrate cuts by the Federal Reserve this year. Trading in fed funds futures\nno longer anticipates rate cuts in September.<\/p>\n

\u201cCorporate earnings performance is actually quite solid, but market\nsentiment is difficult. Oil prices and equity valuations reflect the\ninterest rate path that is now being questioned,\u201d said David Aspell,\nChief Investment Officer for Global Macro at Mount Lucas Management, to\nCNBC International.<\/p>\n

BRIEF TRADING WEEK AHEAD<\/p>\n

Trading this week will be extremely brief\u2014just two days, Monday and\nTuesday\u2014before an extended holiday and joint leave for Eid al-Fitr from\nWednesday (18 March 2026) through the following Tuesday.<\/p>\n

Unfortunately, before the extended holiday, investors face numerous\nconcerns about domestic and global conditions.<\/p>\n

Global financial markets will encounter substantial sentiment shifts\nand critical data releases this week. The Middle East conflict and its\nimpact on energy supply will remain the primary driver of global\nmarkets. This issue will also play a crucial role in a series of\ninterest rate decisions from major central banks worldwide.<\/p>\n

The primary focus this week is central bank decisions. At least\neleven central banks will hold interest rate decision meetings this\nweek, including the US Federal Reserve and Bank Indonesia.<\/p>\n

With the Indonesian market closed amid significant global data\nreleases, investors must carefully assess what actions to take during\nthese two trading days.<\/p>\n

MAJOR MARKET DRIVERS THIS WEEK:<\/p>\n

Bank Indonesia Decision<\/p>\n

Bank Indonesia (BI) will hold a Board of Governors Meeting (RDG) on\nMonday and Tuesday this week (16-17 March 2026) and will hold a press\nconference on Tuesday.<\/p>\n

BI is expected to hold its benchmark interest rate at 4.75% this\nmonth to maintain rupiah exchange rate stability amid intensifying Iran\ntensions and rising oil prices.<\/p>\n

BI has maintained its benchmark rate at this level since September\n2025.<\/p>\n

External Debt<\/p>\n

BI will today announce Indonesia\u2019s external debt data for January\n2026.<\/p>\n

Indonesia\u2019s external debt position in the fourth quarter of 2025\n(December 2025) stood at US$431.7 billion, up marginally from US$427.6\nbillion in the third quarter of 2025. This increase was primarily driven\nby the public sector.<\/p>\n

The government\u2019s external debt position in the fourth quarter of 2025\nwas recorded at US$214.3 billion, up from US$210.1 billion in the third\nquarter of 2025. BI attributed this increase to foreign capital inflows\ninto international sovereign bonds, reflecting sustained investor\nconfidence amid global uncertainty.<\/p>\n

BUDGET DEFICIT RISKS<\/p>\n

Rising oil prices have prompted the government to mitigate worst-case\nscenarios.<\/p>\n

Coordinating Minister for Economic Affairs Airlangga Hartarto\nreported to President Prabowo Subianto on Friday (13 March 2026)\nregarding scenarios where the state budget deficit becomes difficult to\nmaintain at 3%.<\/p>\n

This was triggered by global geopolitical uncertainty, particularly\nthe Middle East conflict impacting rising global oil prices and\ndisrupting oil market supply.<\/p>\n

Airlangga stated that all simulated scenarios indicate the state\nbudget deficit could breach the maximum threshold established in the Law\non State Finance\u20143% of gross domestic product (GDP).<\/p>\n

The scenarios he employed to calculate this risk assumed the Middle\nEast conflict would last between six and ten months, with average crude\noil prices rising to US$97 per barrel or US$115 per barrel.<\/p>\n

Airlangga outlined several scenarios based on potential changes in\noil price assumptions and exchange rates. Three scenarios include:<\/p>\n

    \n

  1. Indonesian crude oil price (ICP) of US$86 per barrel, exchange\nrate of Rp 17,000 per US dollar, whilst the budget assumes an exchange\nrate of Rp 16,500 per US dollar, with growth maintained at 5.3% and\nsovereign bonds 6.8% higher, resulting in an estimated budget deficit of\n3.18%.<\/p><\/li>\n

  2. A second moderate scenario with ICP of US$97 per barrel, exchange\nrate of Rp 17,300, growth of 5.2%, and sovereign bonds 7.2% higher,\nresulting in a deficit of 3.53%.<\/p><\/li>\n

  3. A worst-case pessimistic scenario with ICP of US$115 per barrel,\nexchange rate of Rp 17,500, growth of 5.2%, and sovereign bonds at 7.2%,\nresulting in a deficit of 4.06%.<\/p><\/li>\n<\/ol>\n

    \u201cThis means across these various scenarios, maintaining the 3%\ndeficit becomes difficult unless we cut expenditure and reduce growth,\u201d\nAirlangga said during a Full Cabinet Meeting at the State Palace in\nJakarta on Saturday (14 March 2026).<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rising-tensions-before-holiday-11-central-banks-meet-as-budget-deficit-risk-grows-1773618768", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }