SUMMARY
Strong economic growth in the US as indicated by
strong labor market, rising consumption and improving property market have lead
to much smaller monetary stimulus from Federal Reserve. Monetary stimulus could
soon be ended and followed by interest rate hikes. Global market investors fear
that economic growth could be stalled or worse.
Rising military tensions in Ukraine and Middle East
are the new challenges faced by global economy. The crisis is feared could be
worsened and threatened fragile global economic recovery. The military crisis
and less monetary stimulus from The Fed could lead to high volatility in the
financial market and major correction to risky assets.
Improving inflation outlook in Indonesia, peaceful
condition after presidential election result and steady Rupiah should open the
possibility of rate cuts by Bank Indonesia. Lower interest rate should improve
Indonesia economic growth and also potentially positive to Indonesia financial
market.
Indonesia is still facing a major headache to the
economy which is the fuel subsidy. Fuel subsidy has burdened government budget
and also lead to trade deficit. High Indonesia budget and trade deficit and
possibility of global risk aversion could weaken Rupiah and reduce the
possibility of interest rate cuts by Bank Indonesia.
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