Influence Of BI Rate, FED Rate, And Inflation On Composite Stock Price Index (JCI)

Abstract

<p><em><strong>Abstract - This study has a direction to explain the impact of BI Rate, FED Rate, and Inflation simultaneously, partially, and potentially dominant variable influence on the Composite Stock Price Index by conducting a multiple linear regression analysis. The data conducted is monthly data from January 2013 to December 2020 with a sample of 96 time series data for each free and bound variable. The analysis shows that BI Rate, FED Rate, and Inflation simultaneously have a significant effect on the Composite Stock Price Index. As the results of the analysis describe the first, BI Rate partially shows the negative influence on the Composite Stock Price Index; second, the FED Rate has no effect on the Composite Stock Price Index; third, inflation represents a negative influence on the Composite Stock Price Index. In the end, variables that affect the dominant potential of the Composite Stock Price Index are variables of Rupiah Exchange Rate. The results in this study explain the diversity of news on changes in the FED Rate so that investors are confident in their own self-assessment to provide results in investing in stocks.</strong></em></p><p><strong>Keywords: BI Rate, FED Rate, Inflation, Composite Stock Price Index.</strong></p>

To Study Inflation Impact in Malaysia Against the Stock Portfolio Investment in Bursa Malaysia

“…The question on the ability to beat the inflation had remained as the question for the investors as the investors are actively seeking for the alternative to invest in the opportunity to earn higher than the inflation to increase the wealth of the individual over time (Yusuf et al, 2021). The role of investment will be to overcome the loss of value in money through the time value of money over time.…”

“…The act of the investment had been targeted to maintain the value of money over time to avoid losing the value of the money through the time value of money. Despite the strong suggestion of investment, there is no strong indication for the investors on the preferred investment choice that will contribute to higher rate to beat the rising inflation of the country (Yusuf et al, 2021). With reference to the knowledge of investment, the importance of the portfolio investment had demonstrated the lower risk of return for the investors which contribute to the concept of investing in multiple different stocks within the stock market exchange (Salisu et al, 2020).…”

“…With this, this study is targeted to understand the outcome on investing in the stock market exchange against the increase of the inflation rate over time. This will help to understand whether the decision to invest in a well-diversified portfolio will help to create the return of the portfolio that will achieve higher than the inflation rate of the country (Yusuf et al, 2021). The target setting will reference to the performance of the overall stock movement referencing to the market index performance of the KLSE in Malaysia.…”

“…Besides, Yusuf et al (2021) highlighted that the construction of a portfolio had been intended to improve the return per risk measurement for the investors which is deemed as the ideal method to hedge against the rising inflation. In most cases, the previous study suggested that the use of portfolio investment approach had been showing favorable result as the portfolio return will have the higher tendency to record a positive return for the investors even during time of recession (Antonakakis et al, 2017).…”

PHENOMENA OF ECONOMIC CONTRACTION IN PANDEMI TIME: Inflation, Reference Interest Rate, Rupiah Exchange Rate & Money

“…The Bank Indonesia interest rate (BI rate) is a policy interest rate that reflects the attitude or monetary policy stance set by Bank Indonesia and announced to the public (Yusuf, et al, 2021). An increase in the BI rate will affect an increase in inflation in a country (Fahlevi, 2019).…”