Heteronomics Archive

May 29, 2025

Korea: 25bp Rate Cut To 2.5% (Consensus 2.5%) in May-25

The Bank of Korea reduced its base rate by 25bp to 2.50%, as widely anticipated, in response to a marked deterioration in growth prospects and persistent domestic demand weakness.
While inflation remains stable and near target, the MPC flagged rising household debt and FX volatility as key risks, indicating future rate decisions will carefully weigh financial stability against the need for further stimulus.
The policy outlook remains dovish, but the pace and extent of additional easing will depend on incoming economic data, developments in global trade policy, and the evolution of financial market risks.

May 28, 2025

The RBNZ reduced the Official Cash Rate by 25 basis points to 3.25%, in line with consensus expectations, citing subdued core inflation, spare economic capacity, and global headwinds.
The decision, reached by a 5-1 majority, reflects internal debate over the pace of easing and a shift toward a more data-dependent policy approach, with no explicit guidance on further rate cuts.
Evolving global trade tensions will influence future interest rate decisions, domestic inflation expectations, and the pace of economic recovery, with the OCR projected to reach 3.00% by year-end but subject to heightened uncertainty.

May 21, 2025

Bank Indonesia cut the BI-Rate by 25 basis points to 5.50%, matching consensus forecasts and resuming monetary easing after a three-meeting pause, citing controlled inflation and rupiah stability.
The decision was driven by subdued inflation, a stabilised currency, and weaker-than-expected GDP growth, with BI revising its 2025 growth forecast slightly downward and emphasising the need to support domestic demand.
Future interest rate policy will remain data-dependent, with further easing possible if inflation and currency stability persist. Still, BI is expected to proceed cautiously given ongoing global uncertainties and the need to safeguard external resilience.

May 20, 2025

The RBA cut the cash rate by 25bps to 3.85%, in line with expectations, as trimmed mean inflation fell below 3% and is likely to remain near the midpoint of the 2–3% target range.
Despite easing financial conditions and recovering household incomes, consumption momentum remains weak, while high unit labour costs, driven by subdued productivity, present lingering inflation risks.
Global trade uncertainty and geopolitical tensions weigh heavily on the outlook, reinforcing the RBA’s cautious approach and commitment to respond decisively if downside risks to growth or inflation emerge.