Archive

December 05, 2025
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India: Goldilocks Gives Way to Constraints

  • RBI cuts repo rate by 25bps to 5.25% as expected, citing exceptional disinflation (0.25% October CPI) and 8.2% growth, though maintaining a neutral stance signals easing cycle may be nearing end.
  • It forecasts headline inflation to fall to 0.6% in Q3 before rebounding sharply to 2.9% and 3.9% subsequently, limiting the scope for additional rate cuts despite growth moderating from current highs.
  • Durable liquidity injections alongside rate cuts acknowledge monetary transmission constraints. The consensus sees 5.25% as the terminal rate, with policy dependent on inflation normalisation and external sector stability.
November 27, 2025
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BOK: Rate Cut Hopes Damped by Stickier Inflation

  • The BOK maintained 2.5% rates as the consensus expected. Upward inflation revisions to 2.1% (2025) and 2.1% (2026) signal stronger price persistence than previously forecast, increasing rate-cut caution.
  • Policy remains data-dependent with the "possibility" of cuts only after material disinflationary evidence emerges. Financial stability risks around housing and household debt levels now drive policy constraints more than growth concerns.
  • Exchange rate depreciation and sticky service inflation create headwinds against achieving the 2% target, likely keeping rates elevated through early 2026 despite modest growth recovery expectations of 1.8%.
November 26, 2025
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RBNZ Eases While Eyeing Medium-Term Inflation

  • The RBNZ surprised some economists by lowering the OCR 25bps to 2.25%, prioritising support for a hesitant economic recovery.
  • The policy outlook will hinge on real-time inflation, labour, and external data, with macro risks remaining broadly balanced.
  • Cautious, flexible monetary policy is expected, with future interest rate moves highly data-dependent and state-contingent.
November 19, 2025
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Indonesia Holds Rates as External Headwinds Intensify

  • Bank Indonesia paused rate cuts at 4.75%, shifting focus from growth to rupiah stability. This outcome was no surprise to the consensus as external risks intensified.​
  • Further easing depends on rupiah stabilisation, not inflation alone. Elevated term premia and expanded FX operations reflect caution.​
  • Macroprudential incentives and FX measures aim to support growth while monitoring weak credit transmission after previous rate cuts.

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