• Bank Indonesia (BI) maintained the interest rate at 4.75 percent for the sixth consecutive month at its March meeting, reflecting an ongoing cautious policy stance amid pressures from the Middle East conflict, which has led to accelerating inflation and a persistently weakening Rupiah.
• KResearch expects that, given the current situation, the opportunity for BI to cut interest rates will be more limited. However, should Middle East tensions ease during 1H26—leading to reduced pressure on the currency and inflation—it is possible that BI could resume rate cuts in 2H26. One or two potential reductions could bring the rate down to approximately 4.25 percent.
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