Bank Indonesia (BI) resumed its easing cycle with a 25bp cut to its benchmark 7-day reverse repo rate, to 5.25%, today and, with inflation subdued and GDP growth likely to slow, we think there’s scope for a bit more easing over the rest of this year and in 2026. The rate cut might have come anyway, but the trade deal that President Trump announced overnight helped Bank Indonesia by removing a key source of uncertainty. While details are still sparse, it appears to be similar to that agreed with Vietnam, with clamping down on re-routing from China, once again, a key target.
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