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

• Bank Indonesia held the BI-Rate at 5.75%, consistent with market expectations, as inflation remains subdued and global uncertainty persists.
• The trade surplus and strong foreign exchange reserves provide resilience, though capital flows remain volatile amid shifting global risk sentiment.
• The central bank maintains a cautious easing bias, with future rate adjustments contingent on inflation trends, Rupiah stability, and global financial market conditions.

Canada: 25bp Rate Cut To 2.75% (Consensus 2.75%) in Mar-25

• The Bank of Canada cut the policy rate by 25 basis points to 2.75%, in line with expectations, as heightened US trade tensions introduced downside risks to economic activity despite stronger-than-anticipated GDP growth.
• Inflation remains near the 2% target but is expected to rise to 2.5% in March due to the expiry of temporary tax measures, while concerns over tariffs have lifted short-term inflation expectations.
• The Bank will closely assess the balance between weaker demand and higher cost pressures, maintaining a data-dependent approach to future rate decisions, with inflation expectations and trade policy developments being key determinants.

ECB: Meaningfully Less Restrictive

• The ECB’s sixth 25bp deposit rate cut to 2.5% was unsurprising, and its characterisation of policy as meaningfully less restrictive leaned towards our relatively hawkish view.
• Policy rates may already be close to neutral. Looser fiscal policy plans also pressure monetary policy to follow a tighter path than would otherwise have been necessary.
• We still expect the ECB to hold rates in April, which is no longer a controversial call. A final 25bp ECB cut in June remains in our outlook (BoE cuts in May and Fed on hold).

By Philip Rush

Malaysia: Policy Rate Held At 3.0% (Consensus 3.0%) in Mar-25

• Despite global uncertainties, Bank Negara Malaysia maintained the policy rate at 3%, citing sustained economic resilience, robust domestic demand, and investment activity. The 5.1% GDP growth in 2024 supports the decision, although external risks remain.
• Inflationary pressures remain contained, with headline inflation at 1.7% in early 2025, supported by easing global cost conditions and lower commodity prices. However, upside risks persist from domestic policy spillovers and external factors, including financial market volatility and trade policy shifts.
• The ringgit remains influenced by external factors, with narrowing interest rate differentials providing support amid global uncertainty. The MPC’s data-dependent approach ensures monetary policy remains conducive to growth while preserving price stability.