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BI Macroeconomic Analysis Series: BI Board of Governors Meeting, August 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

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

  • Difa Fitriani

  • Mervin Goklas Hamonangan

  • Hardy Salim

  • Alif Ihsan A Fahta

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

Abstract

Headline inflation continued on its upward trajectory since last May and reached 2.37% (y.o.y) in July 2025. The main contributors of July’s inflation are attributed to supply disruption in various food commodities and demand for gold jewellery. On the external front, the current U.S. inflation and unemployment rate are interpreted by investors as a signal that the Fed rate cut might happen sooner than previously anticipated. As a consequence, Indonesia experienced a considerable capital inflows into bonds and stock market in the last few weeks with the total of USD1.08 billion and appreciated Rupiah by 1.04% (m.t.m) in the last 30 days. However, with the Trump tariffs come into effect, the risk of inflationary pressure in the upcoming months is apparent and any rate cut by Bank Indonesia might exert more inflationary pressure risks. Hence, we view that BI should keep its policy rate steady at 5.25% in the August 2025.

Suggested Citation

  • Jahen F. Rezki & Teuku Riefky & Faradina Alifia Maizar & Difa Fitriani & Mervin Goklas Hamonangan & Hardy Salim & Alif Ihsan A Fahta, 2025. "BI Macroeconomic Analysis Series: BI Board of Governors Meeting, August 2025," LPEM FEBUI BI Board of Governor Meeting Brief 202508, LPEM, Faculty of Economics and Business, University of Indonesia, revised Aug 2025.
    • Handle: RePEc:lpe:gomeet:202508
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