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Macroeconomic Analysis Series: BI Board of Governor Meeting, January 2025

Author

Listed:
  • Jahen F. Rezki

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Teuku Riefky

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

  • Faradina Alifia Maizar

  • Difa Fitriani

  • Mervin Goklas Hamonangan

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

Abstract

Rupiah remained under pressure throughout the past month, primarily due to revised expectations that the Fed will lower interest rates only twice in 2025, rather than the earlier projection of four rate cuts. This adjustment reflects persistently high inflation in the U.S and the potential inflationary effects of policies introduced by President-elect Trump. Between mid-December 2024 and mid-January 2025, the capital outflow from Indonesia totalled USD0.75 billion, comprising USD0.12 billion exiting the bond market and USD0.63 billion leaving the stock market. During this period, Rupiah continued its depreciation, reaching IDR16,195 per USD on January 9, 2025, a 2.11% decline from the previous month's level of IDR 15,860 per USD. Meanwhile, Indonesia's inflation rate at the end of 2024 fell to its lowest point since 1958. Despite this record low inflation, we view that Bank Indonesia should keep the BI rate unchanged at 6.00% in the first Board of Governors meeting in 2025 to prevent Rupiah from weakening further

Suggested Citation

  • Jahen F. Rezki & Teuku Riefky & Faradina Alifia Maizar & Difa Fitriani & Mervin Goklas Hamonangan, 2025. "Macroeconomic Analysis Series: BI Board of Governor Meeting, January 2025," LPEM FEBUI BI Board of Governor Meeting Brief 202501, LPEM, Faculty of Economics and Business, University of Indonesia, revised Jan 2025.
    • Handle: RePEc:lpe:gomeet:202501
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    File URL: https://lpem.org/repec/lpe/queouts/BBG202501.pdf
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