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EA Inflation Predictably Near The Target

• Disinflationary news from May’s flash inflation release was confirmed in the final print, although a rebound in some underlying inflation measures damped the initial signal.
• Resurgent oil prices could rapidly reverse the dovish space expanded by past falls. Our forecast bumps around the target through 2026 and 2027, settling at 2%.
• Other forecasts are a little lower and only suffer a slight bias to be exceeded. The ECB can remain reassured by an outlook close to 2% without cuts, and not deliver any more.

By Philip Rush

Indonesia: Policy Rate Held At 5.5% (Consensus 5.5%) in Jun-25

• Bank Indonesia maintained the BI-Rate at 5.50% in June 2025, in line with consensus expectations, citing stable inflation and a resilient rupiah as key factors.
• The decision reflects a cautious approach amid persistent global uncertainties, with BI emphasising the need to preserve macroeconomic stability while supporting growth through accommodative macroprudential and payment system policies.
• The interest rate outlook remains data-dependent, with the central bank signalling potential for further easing if inflation and currency stability persist, but maintaining a prudent stance given external risks and the need to attract foreign capital.