Video: Beware of the 'Higher for Longer' Era Effects on Indonesian Financial Markets!

The United States Central Bank, the Federal Reserve System (The Fed), has officially raised the benchmark Fed Funds Rate by 25 bps to 3.75%-4.00% during the Federal Open Market Committee (FOMC) meeting on Wednesday (16/09).

Maesaroh, an economist at CNBC Indonesia Research, suggests that the Fed’s interest rate hike will alter the direction of global monetary policy, which has already been driving up benchmark rates. Furthermore, signals of further rate hikes by the Fed align with US macroeconomic data, specifically regarding inflation remaining far from the 2% target and continued strength in labour market data.

Amid ongoing war tensions and surging global oil prices that are driving up global inflation, an era of high interest rates appears difficult to avoid. For financial markets, this condition is expected to encourage capital outflows from both equity and bond markets, including those in Indonesia.