BI Governor Predicts Fed Funds Rate Cut Still Far Off, End of 2026!

Jakarta, CNBC Indonesia - Bank Indonesia (BI) estimates that the Fed Funds Rate (FFR) will remain in the 3.5%-3.75% range until the end of this year. BI Governor Perry Warjiyo stated that the central bank anticipates the Federal Reserve (the Fed) will only lower the FFR at the end of this year. This forecast aligns with the signals given by the Fed in its last meeting in March. “The reduction in the Fed Funds Rate is delayed or held until the end of 2026,” said Perry during the BI Board of Governors Meeting on Wednesday (22/4/2026). According to Perry, this is consistent with the rise in global inflation from 4.1% to 4.2%, which is also felt in the United States (US). This condition narrows the room for monetary easing. On the other hand, US bond yields are rising due to fiscal deficits related to military funding. This situation further drives capital flows to safe havens, including the US dollar. Therefore, the US dollar index, the DXY Index, continues to strengthen while emerging market currencies are under pressure, including the rupiah. Until March 2026, the Federal Reserve (Fed) maintained interest rates, although it still projects one 25 basis point rate cut at the end of 2026. Nevertheless, the US government continues to exert political pressure to lower interest rates to reduce debt borrowing costs amid tight fiscal conditions.