Saturday, 25 June 2022 | 11:05 WIB

Sri Mulyani: The Fed’s Fund Rate Cut is Good for Indonesian Economy

Sri Mulyani Indrawati, Indonesia Minister of Finance (setkab)

JAKARTA, NETRALNEWS.COM - Indonesia Minister of Finance Sri Mulyani Indrawati has welcomed the decision of the Central Bank of the United States (US) or the Federal Reserve (The Fed) to again cut the Fed's benchmark rate. The US benchmark rate cut would have a positive impact on the Indonesian economy.

Sri Mulyani said the Fed's decision would be a positive sentiment for emerging market countries that are most affected by the Fed's tightening policy in 2018, as low interest rates would provide room to boost the economy.

"So this cut gives space to everyone, including Indonesia, to be able to use this momentum  to push up economic activities," she said during the 2019 Networking CEO event at the RitzCarlton Hotel in Jakarta, on Thursday (10/31/2019).

Sri Mulyani said the Fed's benchmark rate cut wwould be able to boost growth in the investment sector, as the US benchmark rate cut would be followed by other countries' central banks, and the impact will begin to be seen in late 2019.

She continued that the positive impact of the Fed's policy would be increasingly felt for the investment sector if China and the US could immediately find an agreement to end the trade war.

"A reduction in interest rates means the cost will be lower. We certainly hope that momentum will emerge in the end of 2019 and will continue to be sustained in 2020," Sri Mulyani said, as reported by Antara.

Earlier, The Fed has just cut its benchmark interest rate by 25 basis points to 1.50-1.75 percent on Thursday (10/30). The cut will be the third time the Fed has done so in 2019.

Meanwhile, data from the Investment Coordinating Board (BKPM) noted that in the third quarter of 2019, Indonesia's investment realization reached IDR205.7 trillion, a growth of 18.4 percent compared to IDR173.8 trillion in the same period in 2018.

Domestic Investments stood at IDR100.7 trillion, up 18.9 percent from the previous year which was IDR84.7 trillion. Foreign Investments rose 17.8 percent to IDR100.5 trillion from IDR89.1 trillion in the same period last year.

The total investments above created 212,580 jobs, consisting of 109.470 jobs through domestic investments, and 103,100 jobs through foreign investment projects.