President Donald Trump and The Federal Reserves Governor Jerome Powell - Photo by Getty Images

JAKARTA (TheInsiderStories) — Good morning! The Federal Open Market Committee will announce the United State’ (US) rate decision today. Fear over Federal Reserve (Fed) officials’ reference to a rate hike has shaken the United States financial market.

The Rupiah and a handful of other currencies are benefiting from this. The local currency has strengthened by 0.64 percent to 14,532 against the US Dollar. In the US market, a sell-off occurred in the S&P 500, which consists of big capital public companies, taking the index to its lowest point in 14 months. Investors also have made the largest-ever shift into bonds this month.

Commenting on the situation affected by Fed rate announcement, US President Donald Trump expected that FOMC will not increase the reference rate. He tweeted, “I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!”

While Trump was busy commenting on the Fed, Chinese President Xi Jinping, attending the ‘40th anniversary of China’ reform and opening up’ ceremony emphasized the country’ right to pursue its own path going forward.

Without mentioning trade tension with the US in his nearly 1.5 hour remarks, Xi spoke of China’s superiority. “No one is in a position to dictate to the Chinese people what should or should not be done,” said Xi.

China is now in a 90-day tariff ceasefire with the US, after months of trade tariff retaliations. And Xi’s remarks are quite provocative and may add further tension to the trade war.

The Indonesian government has given no statement yet regarding plans to increase premium prices, although the trade balance deficit is widening due to oil imports. According to the Statistic Indonesia, oil and gas import during January-November 2018 totalled US$27.81 billion. While oil and gas exports were only $15.65 billion.

Vice President Jusuf Kalla said, fuel prices may have adjustment. But it depends on the gasoline companies, not a government decision, he stated.

While, the Financial Service Authority predicts that Indonesia’s economic growth will reach 5.2 percent in 2018. The figure is higher than 2017’s realization of 5.07 percent and 2016 with 5.03 percent. This year’s engine for economic growth comes from Java and Sumatera, while Maluku and Papua record their highest growth.

There are a lot of challenges being faced by the government in boosting economic growth. Globally, the Fed which will raise interest rates, Trump’s protectionist policy, fluctuating commodity prices, and the growth slowdown of world economies. Internally, Indonesia is still facing a fiscal deficit, trade balance deficit, and current account deficit.

Then, state-owned miner PT Indonesia Asahan Aluminium (Inalum) expects to finalise a deal this week to take majority control of the local unit of global mining giant US’ Freeport McMoRan Gold & Copper Inc. Inalum was proposing to sell a 10 percent stake in PT Freeport Indonesia to Papua for $819 million.

May you have a profitable day!

Written by Linda Silaen and TIS Intelligence Team, Please visit our new website to get more insight on Indonesia’s economy: www.tisintel.com

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