Indonesia entered the final quarter of 2025 with persistently elevated inflation, resurgent external pressures, and growing investor caution. Headline inflation rose in October as food prices remained high due to weather-related supply disruptions, and rising gold prices continued to drive up core components. At the same time, capital outflows increased despite the Fed's interest rate cut, driven by growing concerns about fiscal and quasi-fiscal risks, particularly following the government's plan to take over debt for the Whoosh high-speed rail project. These developments weakened the Rupiah and heightened the importance of policy credibility. In this environment, maintaining the policy rate at 4,75% at the upcoming Board of Governors Meeting would support Rupiah stability and bolster confidence in Bank Indonesia's policy stance.
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