Speculation of an increase in the Fed Funds Rate (FFR) by 75 bps, pressured Wall Street’s stock market to fall more than 2%. The Dow Jones fell by 2.82%, its biggest one-day drop since October 2020, as the Fed President Cleveland stated that there was a chance the FFR would rise by 75 bps. This statement sparked speculation that its implementation will occur in June and July. This tight monetary policy is in response to March inflation which rose 8.5% YoY, well above the Fed’s average target of 2% YoY.
JCI closed lower by 51 points to 7,225 ahead of the Federal Open Market Committee (FOMC) meeting on May 3-4, 2022 (local time), coinciding with the stock exchange holiday in Indonesia. In the FOMC meeting, May’s FFR has the opportunity to rise 50 bps to 0.75%-1.00% (Vs. Prev. 0.25%-0.50%). In the next four trading days, investors will pay close attention to the 1Q22 financial releases for the banking and consumer sectors, as well as the dividend cum date of a number of issuers, amid speculations of a 75 bps FFR hike for the June and July periods.
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