Archive

Trump-ism And East Asia

• Donald Trump’s abandonment of the US-led international order and efforts to reshape global trade and finance do not bode well for East Asian economies that may find themselves forced by Washington into a Chinese sphere of influence as part of a grand bargain with Beijing.

By Alastair Newton

Indonesia: Policy Rate Held At 5.75% (Consensus 5.75%) in Feb-25

• Bank Indonesia held the BI-Rate at 5.75%, in line with expectations, maintaining a cautious stance as inflation remains within target and global financial uncertainty persists.
• The central bank reinforced macroprudential measures to support credit growth and external stability, including expanding the KLM programme and strengthening foreign exchange policies.
• Future rate decisions will be data-driven, with further easing contingent on inflation stability, Rupiah resilience, and global financial market developments, particularly the trajectory of US monetary policy.

Indonesia: 25bp Rate Cut to 5.75% (Consensus 6.0%) in Jan-25

• Bank Indonesia lowered the BI-Rate to 5.75%, surprising consensus expectations. It cited low inflation and the need to support growth amid subdued domestic demand and stable external conditions.
• The Rupiah remains relatively stable due to robust reserves and proactive interventions, although global pressures from US fiscal policies and limited FFR cuts pose risks to external stability.
• Future policy adjustments will hinge on domestic growth performance and global financial developments, with continued emphasis on macroprudential measures, financial digitalisation, and fiscal coordination to strengthen economic resilience.

Indonesia: Policy Rate Held At 6.0% (Consensus 6.0%) in Dec-24

• Bank Indonesia held the BI-Rate at 6.00%, consistent with expectations, focusing on exchange rate stability and inflation control within the 2.5% ±1% target range amid heightened global uncertainty.
• Strengthened pro-market monetary operations and macroprudential measures aim to attract foreign capital inflows and support credit growth in priority sectors, sustaining financial stability and growth momentum.
• Future policy adjustments will depend on inflation dynamics, external shocks, and capital flow trends, as global risks, such as slower Fed rate cuts and rising US yields, constrain monetary policy flexibility.