According to Jinshi Data, Indonesia's inflation rate fell to a 40-month low in November, and analysts at Maybank expect the Indonesian central bank to cut interest rates this month. Indonesia's overall inflation rate is at the bottom of the central bank's target range of 1.5%-3.5%, coupled with expectations of the Federal Reserve's easing policy in December, laying the foundation for the central bank to cut its policy rate by 25 basis points.
Despite a smaller depreciation in November and a record high in foreign exchange reserves in October, the central bank still has plenty of room to defend the rupiah. Maybank expects more easing from the Federal Reserve by 2025 to give Bank Indonesia room to cut its policy rate by 75 basis points to 5% by the end of the year.