Morning Briefing: US’s FOMC Divided on the Further FFR Hikes in 2019

The minutes of Federal Open Market Committee show the policymakers preparing to change tact on bond purchasing before begin to raise the target range for the federal funds rate - Photo by Federal Reserves Office

JAKARTA (TheInsiderStories) – Good morning! United States’ Federal Open Market Committee (FOMC) minutes meeting showed the member divided wether to raise Federal Reserves fund rate (FFR) this year. Yesterday, the Board decided to maintained the FFR 2.25 to 2.50 percent.

Information received since the FOMC met in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Job gains have been strong, on average, in recent months, and the unemployment rate has remained low.

The minutes also stated, household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier last year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near two percent.

Although market-based measures of inflation compensation have moved lower in recent months, survey-based measures of longer-term inflation expectations are little changed. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.

“In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent,” the Committee stated.

By unanimous vote, the Board also approved the Authorization for Domestic Open Market Operations with a revision that makes clear that small value tests for rollovers and maturities are included in the US$5 billion limit of the operational readiness testing program. The Guidelines for the Conduct of System Open Market Operations in Federal-Agency Issues remained suspended.

At the meantime, two Indonesian citizens and one Malaysian were held hostage by Abu Sayyaf terrorists yesterday. A video which has been circulating shows one of the Indonesian fishermen with a machete to his neck appealing to Indonesia’ president to help secure their release.

The video was uploaded on Facebook by Kim Hundin on Feb. 14, showed he two hostages are believed Heri Ardiansyah, 19, and Hariadin, 45. Foreign ministry confirmed the two Indonesian hostage by the terrorists.

In the Bilateral Maritime Forum Indonesia-Netherlands on Wednesday (02/20) attended by Maritime Coordinating Minister Luhut Binsar Pandjaitan and Dutch Ambassador Rob Swartbol in Jakarta agreed to strengthen the potential fields of the maritime sector. The meeting was the third agreement after previously being held for the first time in 2016.

While, the government assured the development of Light Rail Transit (LRT) in the Greater Jakarta continues. So far, the project is still constrained by land acquisition issues owned by PT Adhi Karya Tbk (IDX: ADHI) and PT Kereta Api Indonesia. LRT’ projects worth Rp29.9 trillion (US$2.13 billion).

The government appointed ADHI through Presidential Regulation Number 98 Year 2015 to build six LRT lines in surrounding Jakarta.

The LRT track length is 43.3 kilometers and will divide in three segments.

Furthermore, Indonesian government received Rp21.32 trillion offering from five sharia bond auction, on Feb. 19. The auctions are for reopening of SPNS01082019, PBS014, PBS019, PBS021, and PBS022. As a result, government decided to won Rp8.12 trillion bids.

The amount of Rp1.3 trillion won from the sharia bond series SPNS01082019 which has 6.48 percent yield. Meanwhile, PBS014 with 7.68 percent yield has Rp2.8 trillion, PBS019 with 7.89 percent yield has Rp1.62 trillion, and PBS021 with 8.1 percent yield has Rp2.4 trillion. But government decided no to accept any offering from series PBS022. After this, government will hold more state securities auction on Feb. 26.

Yesterday, Indonesian financial market moved positive ahead of Bank Indonesia 7-Day Reverse Repo rate announcement. Rupiah strengthened by 0.45 percent tp 14,065 against US Dollar. Meanwhile, Jakarta Composite Index increased by 0.27 percent to 6,512.78 with Rp450.32 billion foreign net buys. The central bank is estimated to hold its rate at 6 percent.

US$1: Rp14,000

May you have a profitable day!

Written by Linda Silaen and TIS Intelligence Team, Please Read Our Insight to Get More information about Indonesia