Jakarta, CNBC Indonesia – The United States (US) stock market opened mixed on Wednesday (16/6/2021), ahead of a statement by a central bank official (Federal Reserve/The Fed) regarding the direction of monetary policy going forward in the early hours of the morning.
The Dow Jones Industrial Average fell 48 points (-0.14%) at 08:30 local time (20:30 WIB) and within 30 minutes to minus 45.7 points (-0.13%) to 34,253.63. The S&P 500 was down 0.3 points (-0.01%) at 4,246.26. In contrast, the tech giant’s Nasdaq rose 39 points (+0.28%) to 14,111.84.
On Tuesday, the S&P 500 index fell 0.2% after touching a new record while the Dow Jones fell nearly 100 points. The Nasdaq fell 0.7% amid a slump in shares of the tech giant.
The US central bank (Federal Reserve / The Fed) will conclude the Federal Open Market Committee (FOMC) meeting tonight. The benchmark interest rate is expected to remain unchanged, but markets are watching for comments from officials on inflation and possible buying cuts (tapering) securities in the secondary market.
The Fed will also release new projections that could indicate the possibility of raising the benchmark interest rate for the first time in 2023. The press conference will be held at 14:30 local time, or 02:30 am WIB. Previously, Fed officials have not reached an agreement on the possibility of increases in the year.
The meeting was held in the midst of rising inflation in May to the level of 5% which is the highest in almost 11 years. However, this inflation is considered not to reflect the actual economic conditions, and tends to be misleading in the midst of the government’s stimulus.
“The drama this week is about whether the Fed will sit idly by or admit that inflation is rising and the Fed needs tightening [kebijakan moneter],” said Brad McMillan, director of investment at the Commonwealth Financial Network CNBC International.
But for now, he continued, the strongest central bank in the world will choose to direct its policies to target the unemployment issue, so that it will still maintain loose monetary policy to help the economy roll.
The Wells Fargo Investment Institute in its 2021 projection stated that the economic recovery will accelerate next year thanks to vaccinations. The looming risks are inflation, taxes, and benchmark interest rates, although they are considered not to interfere with market movements.
CNBC INDONESIA RESEARCH TEAM
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