The Federal Reserve maintained their reference interest rate around 0.25 percent. That statement was announced in their monetary policy on Thursday, 23 of September 2021.
The two days meeting held by FOMC also creates the decision to start moderating the asset purchasing program. It is in line with the better economy situation because of the pandemic.
Amidst the concern about the delta coronavirus variant, The Fed gave a sign to start their tapering program. That is maybe at the end of this year as the right time so far.
That is why; the 120 billion dollar obligation purchase will be decreases gradually. It is for sure that everything is based on the situation and condition which may occur in the future.
The Probability of When the Tapering will be started
The Fed in a moment after announced the interest level said that if the economy progress is still in line with the prediction, the committee assessed that the asset moderation purchase may be done.
That could be applied as soon as possible. Furthermore, Jerome Powell as the leader said that the tapering program is probably started in November and will be ended in the middle of 2022.
As long as the economy continues to be in a recovery path, the graded tapering program is able to be done. That was said in a press conference lately.
Another news is that the USD is also stronger because the 2022 rate hike prospect is now getting clearer. Market has been anticipating the tapering step in November.
Why the USD is Increasing
The US dollar strengthening is more caused by the increasing interest point expectation made by the Fed. It is because 9 from 18 policy makers committe have been agreeing the rate hike.
That is especially for the 2022 period. That number increase if it is compared to the meeting in July where in that time only 7 members was agreeing the playing.
The Fed interest rate median projection for 2023 period is now significantly rising from 0.6% to become 1.0%. The index of dollar (DXY) was sold around the level of 93.49.
That continues the significant strengthening which was formed after the FOMC announcement in the previous session. However, the situation further may change everything.
The Rupiah Exchange Rate Is Unsure
The Rupiah exchange level to the US dollar moved uncertainty ahead of the policy announcement by the Fed yesterday night. USD has been winning before and reach Rp 14.255.
But the Rupiah was then able to survive and make the Dollar weaken slightly. When this news was written at the beginning of the European session on Thursday, the Rupiah was stable at Rp14,240.
In its official announcement earlier this morning, the Fed organization signaled the start of tapering and pointed to the prospect of a rate hike sooner than expected.
Broadly speaking, the U.S. central bank is optimistic that the economy will continue to improve in the future, so that the stimulus provided so far can be reduced
The Decision has not Been Made Yet
Nowadays, there is not any decisions about when the tapering will be done. Generally, the FOMC members see that the economy recovery is on it’s right track.
If the condition doesn’t change, the gradual tapering can be done and will be finished in the middle of 2022. The rate hike is also stable in the level of 0 – 0 25%.
The projection in 2022 increases after the rate hike support from the FOMC members. This thing adds the reaction in the financial market and Indonesian capital market as well.
This condition is different with what is predicted by the Minister of Financial in Indonesia, Sri Mulyani. Before, she was predicting that the USA interest rate increase will be started in 2023.
