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Jakarta Post

The return of taper tantrum?

Tantrum trepidation: People leave a Bank Indonesia (BI) office building in Central Jakarta on Feb. 26, 2020. Observers have asked the central bank to anticipate a situation similar to the 2013 “taper tantrum” as the US economy recovers this year.(JP/Dhoni Setiawan)
Winarno Zain
Jakarta   ●   Wed, May 5 2021

In May 2013, Ben Bernanke, the then-United States Federal Reserve (Fed) chairman, testified to the US Congress about the possibility of slowing down the pace of the Fed’s quantitative easing (QE) policy as the US economy continued to improve.


QE, which injected billions of dollars into the economy, provided a boost to the global economy and capital markets around the world. But what happened then was extraordinary, because mere talk of tapering QE by the Fed’s chairman resulted in disastrous effects on emerging economies.

This episode, which was dubbed the “taper tantrum”, generated turmoil in the Indonesian economy. There was a huge capital outflow, with foreign direct investment plunging from US$5.3 billion in the third quarter of 2013 to just $500 million in the fourth quarter of that year.

Over the same period,...

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