The Rupiah remained under pressure throughout last month, mainly due to revised expectations that the Fed would cut interest rates only twice in 2025, compared to the previous projection of four rate cuts. This adjustment reflects still-high inflation in the US and the potential inflationary impact of policies that former President-elect Trump may take. Between mid-December 2024 and mid-January 2025, capital outflows from Indonesia reached USD0,75 billion, consisting of USD0,12 billion outflows from the bond market and USD0,63 billion outflows from the stock market. During this period, the Rupiah continued to depreciate, reaching IDR16.195 per USD on January 9, 2025, down 2,11% from the previous month's level of IDR15.860 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 see that Bank Indonesia needs to keep the BI rate unchanged at 6,00% at the first Board of Governors meeting in 2025 to prevent the Rupiah from weakening further.
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