As the US Federal Reserve is holding a crucial policy meeting and set to announce the first Fed Fund Rate hike in over nine years, the Indonesia Stock Exchange (IDX) projects minimum impacts on the market.

IDX trade and membership director Alpino Kianjaya said that the Fed Fund Rate hike is likely to be followed with higher interest rates. However, he believed that both the market and investors had anticipated such an increase.

"So, it'€™s not a problem if it is going up or down by 25 basis points, as the market or investors are already aware since [the plan] has been acknowledged for a long time. It'€™s not terrifying the market," Alpino told to thejakartapost.com on Wednesday.

The Jakarta Composite Index (JCI) rose 1.03 percent or 45.3 points to 4,454.46 at the closing of the first trading session on Wednesday. Meanwhile, the rupiah was seven points stronger, climbing to Rp 14,039 per US dollar.

The Fed is holding the Federal Open Meeting Committee (FOMC), which is set to announce the results of its deliberations on Wednesday at 2 p.m. New York time, which is Thursday at 2 a.m. Jakarta time.

Bank Indonesia (BI) is scheduled to hold a governors board meeting tomorrow afternoon. The central bank is under political pressure, especially from Vice President Jusuf Kalla, to cut interest rates, which it has maintained at 7.5 percent for nine consecutive months.

Most analysts have stated that the central bank has room to cut its interest rates by 25 basis point in the first quarter of 2016 because of cooling inflation.

However, a lower BI rate amid a higher Fed rate would narrow the spread return global investors may gain from holding onto rupiah. It may then lead to capital outflows, a term used to describe when global investors run for better yields by selling rupiah bonds and then using the money to buy US bonds. (ags)(+)

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