Federal Reserve Continues Quantitative Easing at US $85 Billion a Month
Despite widespread speculation that the Federal Reserve would tone down its quantitative easing program (QE3) by approximately USD $10 to $20 billion after the FOMC meeting on Wednesday (18/09), the central bank of the USA decided to continue its monthly USD $85 billion bond-buying program as it downgraded its outlook for US economic growth to between 2.0 and 2.3 percent. Chairman Bernanke said that the economic context of the USA is still far from conducive to alter its strategy.
Economic growth of the USA is forecast to be lower than expected because there has been a contraction in the country's financial sector in recent months. Apart from the downgrade of its outlook for economic growth, the US unemployment rate is still far from the target of the Federal Reserve. At the end of the year, the Fed will study again whether QE3 should be continued or ended (gradually).
For Indonesia, the Fed's decision to continue its quantitative easing program at the same pace is expected to have a positive impact on the country's benchmark stock index as well as the rupiah.
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