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September 17, 2025
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Indonesia Cuts Rate to Support Growth

  • Bank Indonesia surprised markets with a 25bp rate cut to 4.75%, defying consensus expectations as growth concerns outweighed stability considerations.
  • The central bank enhanced policy transmission mechanisms and maintained rupiah stability despite global trade tensions and domestic political uncertainty.
  • Further accommodation appears likely given subdued credit growth, below-target inflation, and coordination with government stimulus measures supporting growth.
September 17, 2025
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Fed Cuts Amid Deep Policy Division

  • Fed cuts rates 25bp as expected, with new Trump appointee Miran dissenting for a 50bp reduction.
  • Labour market weakness drove the policy shift as job growth averages 29k monthly, below the levels likely needed to maintain stable unemployment.
  • Projections show a 9-9 split between one or two more cuts in 2025, and only one more in 2026. The FOMC is not as dovish as the market's pricing.

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