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The Fed Holds Interest Rates for the Fifth Consecutive Time at 3.50-3.75%

The Fed officially held its benchmark interest rate at 3.50-3.75% at the FOMC meeting on Wednesday (29/7), with a 9-3 vote, amid inflation pressures triggered by the Trump-Iran war.

Key Points

Regional Fed presidents Lorie Logan, Beth Hammack, and Neel Kashkari dissented, calling for a 25 bps rate hike

Consumer inflation eased to 3.5% YoY last month, but is expected to rise again due to fluctuations in oil prices amid the Trump-Iran war

The Fed said the economy is expanding at a "solid pace" and remains committed to its 2% inflation target

Fed Governors Christopher Waller and Lisa Cook also voiced concerns about the potential for further rate increases

Market Impact

Mixed sentiment for Indonesia: the hold on interest rates eases immediate pressure on the rupiah

Additional factor for BI Rate room to maneuver going forward, amid still-elevated domestic rupiah pressure.
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