Archive

Trade Avoidance Easing Shocks

• China’s crashing exports to the US partly reflect avoidance measures, including rerouting through other countries and marking down import prices to subsidiaries.
• Exports to the EU and UK are only trending slightly higher, making little difference to disinflation. ASEAN countries, and especially Vietnam, are seeing trade surge again.
• The US may clamp down on avoidance measures that have eased the shock so far. It could make a painful example of one to encourage concessions from all trade partners.

By Philip Rush

Indonesia: 25bp Rate Cut To 5.5% (Consensus 5.5%) in May-25

• 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.

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

• Bank Indonesia maintained the BI-Rate at 5.75%, in line with expectations, with a cautious stance to safeguard price stability and currency fundamentals amid heightened global uncertainty stemming from US-China trade tensions.
• A resilient external position—anchored by a robust trade surplus, substantial reserves, and controlled inflation—has enabled the central bank to manage volatility while preserving policy flexibility.
• With inflation subdued and global headwinds intensifying, Bank Indonesia retains an easing bias, with future rate cuts contingent on inflation dynamics, Rupiah stability, and international capital flow conditions.

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.