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Jakarta Post

Fed rate, Trump tax reform and Indonesian economy

  • Winarno Zain

Jakarta   /   Thu, January 4 2018   /  01:15 am

The Indonesia Stock Exchange (IDX) closed 2017 with a big bang. On Dec. 29, the last day of trading, the Jakarta Composite Index (JCI) reached a record high of 6355.65.

It was higher than in China (6.6 percent), Singapore (18.1 percent), Malaysia (9.5 percent) and Thailand (13.7 percent). Out of that gain, a 6.8 percentage point increase was recorded in December alone.

This was unprecedented since it occurred amid concern over the negative impact of the rise of the United States Federal Reserve benchmark rate and after Bank Indonesia (BI) decided to maintain its policy rate.

The situation was very different from 2013, when the Fed announced possibilities of ending its quantitative easing policy, which meant it would start tightening its monetary policy.

This tapering talk had a significant impact on emerging market countries (EMC) including Indonesia. The t...