Macroeconomic Analysis Series: BI Board of Governors Meeting, June 2025

Jahen F. Rezki (), Teuku Riefky (), Faradina Alifia Maizar (), Difa Fitriani (), Mervin Goklas Hamonangan (), Hardy Salim () and Alif Ihsan A Fahta ()
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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)
Alif Ihsan A Fahta: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)

No 202506, LPEM FEBUI BI Board of Governor Meeting Brief from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: Inflation moderated to 1.60% (y.o.y) in May 2025 after the seasonal cycle of Eid-al Fitr period, which normalized demand for key food products and drove down prices. In addition, signs of prolonged “lipstick effect†suggests continued weak purchasing power, while ongoing global trade tension have dampened aggregate demand. However, the escalation of the tariff war eased somewhat during May and June 2025, reducing global uncertainty and increased risk appetite by global investors toward emerging markets. In the past 30 days, Indonesia experienced net capital inflows of around USD1.59 billion and Rupiah appreciated by 1.03%. Going forward, there remains a risk of heightened uncertainty in the near future as the potential of trade war to re-escalate and rising geopolitical tension in Middle East. Considering these factors, Bank Indonesia should keep its policy rate unchanged at 5.50% in the June’s Board of Governors’ Meeting.

Keywords: gdp; —; economic; —; economic; outlook; —; inflation; —; macroeconomics; —; interest; rate (search for similar items in EconPapers)
Date: 2025-06, Revised 2025-06
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