Jakarta detik -Bank Indonesia (BI) memangkas proyeksi pertumbuhan ekonomi nasional tahun ini, dari 5,2%-5,6% menjadi 5%-5,4%.
Penurunan proyeksi pertumbuhan ini terjadi, kondisi ekonomi Indonesia yang melemah di kuartal I-2016, dan juga belum membaiknya sisi konsumsi dalam negeri dan perlambatan ekonomi global.
Kepala Badan Kebijakan Fiskal Kementerian Keuangan, Suahasil Nazara, mengatakan penurunan proyeksi pertumbuhan ekonomi oleh BI masih masuk akal. Masih sejalan dengan target pertumbuhan ekonomi pemerintah 5,3% di tahun ini.
“Masih di dalam kisaran, (target) kita kan 5,3%,” jelas Suahasil, saat acara 2016 Mid Year Market Outlook oleh CIti, di Hotel Shangri-La, Jakarta, Kamis (19/5/2016).
Sualhazil mengatakan, stimulus perlu diberikan untuk mendorong pertumbuhan ekonomi tersebut.
“Stimulus yang paling penting belanja pemerintah dijalankan dengan secepat mungkin,” jelas Suahasil.
Besaran pencairan belanja modal pada kuartal I-2016 mengalami peningkatan Rp 10 triliun, jika dibandingkan periode yang sama di 2015.
Potensi pertumbuhan ekonomi diperkirakan masih dapat tumbuh sesuai target hingga akhir 2016.
“Belanja modal di kuartal I-2016 Rp 18 triliun, bandingkan dengan kuartal I-2015 Rp 8 triliun, naik Rp 10 triliun. Jadi itu optimisme pemerintah ini spend money belanja,” tutur Suahasil.
Pihaknya juga mengimbau agar pemerintah daerah (Pemda) rutin membelanjakan anggarannya, agar mampu memberikan multiplier effect. Di awal tahun, dana Pemda menumpuk di perbankan dan tidak digunakan, sehingga ekonomi tertahan.
“Daerah kita ingin minta supaya juga belanja. Makanya pemerintah mendesain transfer kalau daerah numpuk-numpuk cash lebih besar dari yang mereka butuhkan 3 bulan ke depan, transfer hak mereka tapi transfernya dalam bentuk obligasi,” pungkas Suahasil.
the economist: THE question of when interest rates will rise gets frequent attention. Less energy is spent wondering where they will end up in the long-run. But for companies thinking about long-term investment projects, and savers planning for retirement—who will need to contribute more to their pension pots should rates stay low—the second question is at least as important as the first. Two new papers from the Brookings Institution, presented at a conference on October 30th, seek to answer it.
In the long-term, interest rates are beyond the control of central banks like America’s Federal Reserve. If the Fed sets rates too high or too low, inflation will veer off-course. Where rates must eventually settle to keep inflation stable depends on economic circumstances. In particular, it depends on what “real” interest rate—the return to saving, adjusted for inflation—balances the economy’s demand with what it can supply. This elusive sweet spot is called the “equilibrium real rate”.
A long list of factors should, in theory, affect the equilibrium real rate. Top of the list is economic growth. If the economy is expanding quickly, people will expect higher incomes in future, causing them to spend more and save less today. That pushes up the equilibrium real rate. Similarly, weak growth should depress the equilibrium real rate.
But James Hamilton of the University of California at San Diego and three co-authors put this relationship to the test using data stretching back to the 19th century, and argue that it is, in fact, quite weak. For instance, in the early 1980s real rates hovered around 6% while growth was a little over 1%, but in the 1990s both growth and real rates were around 3%.
A whole lot of other stuff matters for the real rate too, such as productivity, demographics, and conditions in financial markets. The authors say that this creates much uncertainty as to where the equilibrium rate is today; their best guess is that it lies somewhere between 0% and 2%. This uncertainty, they argue, should make policy more inert. Often, rate-setters assess whether policy is tight or loose by comparing real interest rates to the equilibrium real rate. But when they do not know what the equilibrium real rate is, their next best option is to make changes in rates respond to the data. Rates should rise when the economy looks too hot, and fall when it looks too cold.
Today, that would mean holding rates at zero until the economy heats up a bit; if it then overheats, the tightening should be steeper. This is in stark contrast to the approach argued for by Janet Yellen, the Fed’s chair, who speaks frequently of the need to raise rates in advance of any overheating, but only gradually.
The second paper, by Thomas Laubach of the Fed and John Williams of the San Francisco Fed (and currently a voting member of the Fed’s rate-setting committee), estimates the natural rate of interest by matching a model of the economy to the data. The authors find the real rate has trended down from about 3% at the turn of the millennium to close to zero in the aftermath of the financial crisis. A decline in growth accounts for about half of the increase; the rest, again, is more mysterious. The authors gloomily note that many models have erroneously forecasted a return to normality for several years, and been proved wrong. As things stand, the low equilibrium real rate shows no sign of picking up.
That too has implications for policy. With the equilibrium real rate close to zero, and an inflation target of 2%, the Fed’s policy rate can also be expected eventually to hover around 2%. Given that the Fed cannot cut rates below zero, this gives rate-setters only two percentage points of leeway to cut rates when the economy falls into recession (the Fed went into the last recession with the scope to cut rates by over 5 percentage points).
One potential solution to this is a higher inflation target, as was advocated by Olivier Blanchard, then the chief economist of the International Monetary Fund, in 2010. Were the inflation target, say, 4%, the Fed’s policy rate would eventually settle around 4%. That would give rate-setters more wiggle-room. Unfortunately, higher inflation is costly. The best solution would be to find some way to raise the equilibrium real rate. But that, note the authors, is “outside the scope of monetary policy″.
washington post By Ylan Q. Mui June 15 : The Federal Reserve on Wednesday will unveil the latest version of its strategy for righting the American economy. But the question is: Will anyone believe it?
The nation’s central bank has repeatedly pushed back plans to raise its benchmark interest rate, known as the federal funds rate. The rate helps determine the cost of borrowing money for everything from a new home to a new factory. When the central bank wants to stimulate the economy, it lowers the fed funds rate. When the Fed wants to rein growth in, it raises the rate.
Since 2008, the fed funds rate has been near zero, the economic equivalent of flooring the gas. Now, the Fed is preparing to lift its foot off the accelerator. Forecasts published this spring showed most top officials expected they would raise the target interest rate this year — likely twice.
Federal Reserve projections for the fed funds rate
In Fedspeak, the forecasts are known as the “dot plots.” In March, the median estimate for the fed funds rate at the end of the year was 0.625 percent. At the end of next year, it’s 1.875 percent, suggesting an increase roughly every other time officials meet in Washington to discuss policy. In the long run, officials believe the fed funds rate will settle at 3.75 percent.
But outside the Fed, expectations are that officials will prove much more reluctant to withdraw their support for the recovery. The most likely dates for the central bank’s first move are in October or December, according to prices on fed funds futures contracts. Analysis by CME Group shows the odds for those dates are slightly better than one in three, the most of any meeting. The late start date implies the Fed will only hike rates once this year, not twice as officials believed in March. And the likelihood that the central bank will have to delay until next spring is almost the same as the chance of a liftoff in September.
The Fed will release updated projections on Wednesday after officials meet in Washington for their regular policy powwow. The new projections are expected to more closely mirror the market’s timeline. Yet investors are still betting there’s a 20 percent chance the fed funds rate will be at zero when the calendar flips to 2016. The International Monetary Fund, in a rare move, is urging the U.S. central bank to wait raised the rate until next year.
“The market recognizes that the Fed has repeatedly erred on the optimistic side,” said Eric Lascelles, chief economist at RBC Global Asset Management. “Fool me 50 times, but not 51 times.”
Even the government’s official budget forecasters are dubious of the Fed’s own forecast. Before data was released showing the U.S. economy shrank early this year, the Congressional Budget Office pegged the fed funds rate at 0.4 percent in December and just 1.3 percent in 2016. The median Fed forecast in 2017 is 3.125 percent. The government comes in at 2.4 percent that year, and it doesn’t catch up to the Fed’s longer-run estimate until 2019.
Fundamentally, the mismatch between the Fed and the outside world reflects different pictures of the economy. Investors and the government believe the recovery will turn out to be weaker than the Fed thinks — and for good reason. The Fed has repeatedly predicted that a robust 3 percent growth rate was just around the corner, only to watch the recovery’s momentum dissipate.
That was the case this year. Back in December, officials estimated the economy would grow between 2.6 percent and 3 percent this year. They lowered the range in March to 2.3 percent to 2.7 percent. It is almost certain they will reduce the forecast again when they meet this week. On the other hand, the Fed has also been too pessimistic about the labor market: The unemployment rate has fallen much faster than anticipated, which could push officials to raise rates more quickly.
The Fed has also cautioned against reading too much into their interest rate forecasts. The dot plot is not supposed to predict how Fed policy and the economy will actually unfold. Instead, it represents the best-case scenario for each official: Each dot encapsulates not only each official’s view of the economy, but also what he or she would do about it. That means success is always the end result.
“You have to reverse engineer all the data, all the growth, the inflation, everything else has to follow a certain trajectory such that you do get to that 3.75 percent,” said Jim Caron, portfolio manager of global fixed income at Morgan Stanley Investment Management.
The other caveat is that the Fed does not speak with one voice: Its top ranks include a seven-member board of governors based in Washington and 12 reserve bank presidents based across the country. Only the board and four reserve bank presidents at a time actually get to vote on policy issues. Even within that group, some officials — such as the chair — are more influential than others.
forbes: If The Fed Is Always Wrong How Can Its Policies Ever Be Right? One of the most curiously persistent surrealisms of Washington, DC is the reflexive deference given the Federal Reserve System. The Washington elite tends to accord more infallibility to the Fed than do Catholics the Pope. Now comes one of the world’s top monetary reporters, Ylan Q. Mui, to make a delicate observation at the Washington Post’s Wonkblog, in Why nobody believes the Federal Reserve’s forecasts. Mui: On transformational humanitarian populist political leaders and ideas.
This is a theme that Mui has touched on before. In 2013, she wrote Is the Fed’s crystal ball rosecolored? “ “The market recognizes that the Fed has repeatedly erred on the optimistic side,” said Eric Lascelles, chief economist at RBC Global Asset Management. “Fool me 50 times, but not 51 times.” Even the government’s official budget forecasters are dubious of the Fed’s own forecast. The big question is whether Fed officials can get it right after years in which they have regularly predicted a stronger economy than the one that materialized. In January 2011, Fed officials predicted that GDP would grow around 3.7 percent that year. It clocked in at 2 percent. In January 2012, they anticipated growth of about 2.5 percent. We ended up with 1.6 percent.
To give Ms. Mui’s competition its due, Dr. Richard Rahn at the Washington Times last April crisply noted: What’s going on here? A good bet would be that there’s a problem with the Fed’s reliance on an arcane art. This art is designated “Dynamic Stochastic General Equilibrium” modeling. Sound scientific? Well. With admirable intellectual honesty an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group, Marco Del Negro, Wharton Ph.D. student Raiden Hasegawa and University of Pennsylvania professor of economics Frank Schorfheide (speaking for themselves and not the Fed) open a “ The Federal Reserve had forecast the U.S. economy to grow about 4 percent near the beginning of each year for the last five years. But during each year, the Fed was forced to reduce its forecast until it got to the actual number of approximately 2 percent. (Other government agencies have been making equally bad forecasts.) These mammoth errors clearly show that the forecast models the official agencies use are misspecified and contain incorrect assumptions.
Two part analysis at the NY Fed’s own excellent Liberty Street Economics, Choosing the Right Policy in Real Time (Why That’s Not Easy): The authors go on to conclude in the second part of their analysis: Dynamic Stochastic General Equilibrium modeling sure sounds amazing. And the New York Fed recently detailed how its research group goes about compiling its Whitebook, Blackbook, contributing to the full FOMC’s Tealbook, in The Monetary Policy Advice Process at the New York Fed. It is a very methodical process. “ Model uncertainty is pervasive. Economists, bloggers, policymakers all have different views of how the world works and what economic policies would make it better. These views are, like it or not, models. Some people spell them out in their entirety, equations and all. Others refuse to use the word altogether, possibly out of fear of being falsified. No model is “right,” of course, but some models are worse than others, and we can have an idea of which is which by comparing their predictions with what actually happened. “ In the end, we have shown that policy analysis in the very oversimplified world of DSGE models is a pretty difficult business. Contrary to what it may sometimes appear from listening to talking heads, deciding which policy is best is very rarely a slam dunk.
That said let’s be blunt. If NASA suffered from comparable inaccuracy the manned spaceflight program would have been shut down by an endless series of Challengertype catastrophes many years ago. With forecasts this bad is it any wonder the American economy continually crashes and burns? As I have noted before, yet it bears repeating, Prof. Reuven Brenner powerfully has called our current system to account: Classical liberal economist Axel Kaiser anticipated this line of argument in his book Intervention and Misery: 1929 – 2008 by calling for the “end of the mystery [which] implies the “ [M]acroeconomics is now [astrology’s] modern incarnation: Only instead of stars, macroeconomists look at “aggregates” gathered religiously by governments’ statistical agencies – never mind if the country has a dictatorial regime, be it left, right or anything in between, or has large black markets, as Italy and Greece do, where tax evasion has long been the main national sport. So let us first forget about this “macro” stuff, whose beginnings are almost a century old, and offer a simple alternative for shedding light on the situation today and on possible solutions, hopefully demolish this modern pseudo”science” once and for all.
End of the witch doctors and the definite defeat of the economic astrology that has prevailed in recent decades.” This line of criticism, while apparently alien to the Fed, is nothing new. Hayek, in his Nobel Prize acceptance speech The Pretence of Knowledge tartly observed: That said, nobody, not even the great Hayek, nailed the problem better than did Hans Christian Anderson in The Emperor’s New Clothes: “ We have indeed at the moment little cause for pride: as a profession we have made a mess of things. It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences — an attempt which in our field may lead to outright error. It is an approach which has come to be described as the “scientistic” attitude — an attitude which, as I defined it some thirty years ago, “is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.” I want today to begin by explaining how some of the gravest errors of recent economic policy are a direct consequence of this scientistic error. “
One day, two rogues, calling themselves weavers, made their appearance. They gave out that they knew how to weave stuffs of the most beautiful colors and elaborate patterns, the clothes manufactured from which should have the wonderful property of remaining invisible to everyone who was unfit for the office he held, or who was extraordinarily simple in character. “These must, indeed, be splendid clothes!” thought the Emperor. “Had I such a suit, I might at once find out what men in my realms are unfit for their office, and also be able to distinguish the wise from the foolish! This stuff must be woven for me immediately.” … And now the Emperor himself wished to see the costly manufacture, while it was still in the loom. … “Is not the work absolutely magnificent?” said the two officers of the crown, already mentioned. “If your Majesty will only be pleased to look at it! What a splendid design! What glorious colors!” and at the same time they pointed to the empty frames; for they imagined that everyone else could see this exquisite piece of workmanship. “How is this?” said the Emperor to himself. “I can see nothing! This is indeed a terrible affair! Am I a simpleton, or am I unfit to be an Emperor? “…
If the Fed is making policy based on consistently wrong predictions how good can its policy consistently be? If its forecasts consistently are wrong — as now is undeniable — on what is it basing policy? Guesswork (pretentiously phrased as “discretion”)? America deserves some candor. A frank admission of “guesswork” — even educated guesswork — would better our understanding of why American workers have been for the past 15 years, and are today, engaged in painful belttightening. And, forgive the heresy, just maybe there is a better way than guesswork. Ylan Mui is, as she ought to be, far too politic to be so blunt. Thus it falls to me, in my role as the simpleton on this beat, to declare: The Emperor has no clothes. So now the Emperor walked under his high canopy in the midst of the procession, through the streets of his capital; and all the people standing by, and those at the windows, cried out, ‘Oh! How beautiful are our Emperor’s new clothes! … ‘But the Emperor has nothing at all on!’ said a little child.”
I’d welcome being set straight if the Board of Governors is prepared to contest this simpleton. Surely Chair Yellen or Vice Chair Fischer — both first rate economists and authentically honorable public servants — will support the BradyCornyn Centennial Monetary Commission legislation lately approved by Chairman Hensarling’s House Financial Services Committee. So let the Fed set me straight by entering the beautiful canopy of this Commission to make the case for the exceptional beauty of its handiwork. If, rather, the Fed raises objections to a Commission (to which it will appoint an ex officio commissioner)… perhaps my declaration is not, after all, that of a simpleton. If Fed opposition manifests Congress should be even more eager to enact this Monetary Commission. I say the Emperor has no clothes. If clad, high time to parade its exceptional beauty. Pass the Centennial Monetary Commission. Let’s see the Emperor’s clothes.