Bank Indonesia's Governor Perry Warjiyo predicts a shift in US political dynamics towards more expansionary fiscal policies and a focus on domestic economic strategies.

These political changes are contributing to a stronger US dollar, which is influencing global investor preferences to favor US assets.

However, such policies may lead to higher trade rates and stricter immigration measures in the US, potentially slowing global economic growth and increasing inflation worldwide.

Moreover, rising geopolitical tensions and trade fragmentation are heightening global economic risks, as warned by Bank Indonesia.

This environment may weaken various world currencies and trigger an outflow of foreign portfolio investments from Emerging Market countries, including Indonesia.

To finance the US financial deficit, increased financing needs are expected to push yields higher on both short-term and long-term US Treasury bonds.

As for inflation, the reduction in the US is anticipated to be gradual, resulting in only limited decreases in the Fed Funds Rate.

In light of these challenges, Perry emphasizes the necessity for enhanced policy responses to bolster external resilience against the adverse effects of the global economic slowdown on Emerging Markets.