he global market is waiting for US President Donald Trump to pick the next chair of the board of governors of the United States (US) Federal Reserve, as it will determine the US' monetary policies that will certainly affect other countries, a Bank Indonesia (BI) official has said.
Current Fed chairwoman Janet Yellen is set to end her four-year tenure in 2018, and President Donald Trump is considering her and four new candidates to fill the seat.
“Will it still be Yellen, or will there be someone new like John Taylor or Kevin Warsh? The market is examining whether the new Fed chair will pursue dovish or hawkish policies,” BI senior deputy governor Mirza Adityaswara said in Jakarta on Friday.
The deputy's comment follows global market concerns, particularly Indonesia's, of a possible Fed rate hike by the end of the year, which would lead to the strengthening of the US Dollar.
“It is something normal. The market is only adjusting,” said Mirza. “Once President Trump announces his pick on Nov.3, the market will become stable again.”
He added that dovish policies are more desirable for emerging markets like Indonesia that are in constant need of foreign direct investment.
“But as long as the Fed communicates their policies well, it is fine for them to hold up the rates once the global market recovers,” he added. (bbn)
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