- The Fed keeps its policy rate at 5.25-5.50%, opening the door for a possibility of a Sep-2024 rate cut. However, the still-wide gap between the Fed’s rate cut signal and the market’s expectation may fuel volatility in periods ahead.
- The ongoing rotation to safe assets and peak FFR cut expectation shields the US market from the reversing Yen carry trade, but the same thing cannot be said about the Asian market.
- Limited foreign inflows and the Rupiah’s worsening fundamental means that it might be better for BI to prioritise exchange rate stability over more growth.
