The Consumer Confidence Index (CCI) fell 5.3 points to 121.1 in March 2025, down from 126.4 in February 2025. This decline was driven by a 7-point drop in the Consumer Expectations Index (CEI) to 131.7 in March 2025 and a 3.6-point decrease in the Current Economic Conditions Index (CECI) to 110.6 in March 2025 (Figure 1). All components of the CEI experienced declines, with the most significant decrease observed in the Job Availability Expectations Index, which fell 8.3 points to 125.9 from 134.2. It follows recent widespread layoffs (known locally as PHK) undertaken by many companies due to several factors, including decreased demand, bankruptcy, and production relocation.

Indonesia's foreign exchange reserves grew by 1.68% MoM to US$157.1 billion in March 2025, up from US$154.1 billion in February 2025. The increase was driven by tax and service receipts and government external debt withdrawals amid the Rupiah exchange rate stabilization policy implemented in response to heightened global financial market uncertainty. Furthermore, the current position of foreign exchange reserves remains high, equivalent to financing 6.7 months of imports or 6.5 months of imports and government external debt payments, exceeding the international adequacy standard of approximately 3 months of imports.

U.S. recorded a deflation of 0.1% MoM in March 2025, down from an inflation rate of 0.2% MoM in February 2025, contrary to market expectations of a 0.1% MoM inflation. It was influenced by a 2.4% decrease in the energy index in March 2025, which saw an offset between a decline in the gasoline index and an increase in the electricity and natural gas indices. Meanwhile, the food index rose to 0.5% MoM in March 2025. Additionally, core inflation, which excludes food and energy, decreased by 10 basis points to 0.1% MoM in March 2025 from 0.2% MoM in February 2025 (Figure 1). It was due to a 1.4% MoM decline in the transportation services index.

Indonesia's Consumer Price Index (CPI) experienced inflation of 1.65% YoY in March 2025, following deflation of 0.09% YoY in February 2025. This realization was lower than the consensus forecast of 1.16%. Core inflation remained steady at 2.48% YoY in March 2025. Commodities contributing to core inflation included jewelry, cooking oil, ground coffee, and rice with side dishes. Meanwhile, the volatile food group experienced inflation of 0.37% YoY in March 2025, primarily supported by increases in bird's eye chilies, fresh fish, and shallots, contributing 0.32% to inflation in March 2025. The administered price group experienced deflation of 3.16% YoY, with significant contributions from electricity tariffs, air transportation fares, and non-subsidized fuel prices.

The tariff policies imposed by U.S. President Donald Trump on countries like Mexico, Canada, and China have significantly impacted the global economy. These tariffs were an integral part of Trump's broader economic strategy and reflect historical patterns of protectionism in United States trade policy. Historically, the U.S. implemented strong protectionist measures from the 18th century through the late 19th century before shifting towards more open policies in the 20th century. However, under the Trump administration, there was a shift back towards protectionism with high tariffs on various imported goods.

Money supply (M2) grew by 5.7% YoY to IDR 9,240 trillion in January 2025, up from 5.5% YoY in January 2025. By component, M2 money growth was driven by narrow money (M1) growth of 7.4% YoY and quasi-money growth of 1.8% YoY in February 2025. M2 money growth was supported by M1 money supply growth of 55.7%, consisting of currency outside commercial banks growth of 10.9% and rural banks, as well as rupiah demand deposits comprising electronic money and rupiah savings that can be withdrawn at any time of 44.8%. While M2 money supply growth increased in February 2025, deflation occurred (Figure 1) due to PLN's 50% electricity discount for customers with power capacity below 2,200 VA and declining food commodity prices.

The Fed maintained interest rate at 4.25%-4.50% during the Federal Open Market Committee (FOMC) meeting on March 19, 2025. Fed members anticipate a slowdown in US economic growth while inflation remains high. This policy decision was made due to continued uncertainty surrounding US import tariff policies. This uncertainty underlies the Fed's cautious approach to adjusting fund rates, especially with inflation still above target. The latest Personal Consumption Expenditures (PCE) price index shows general inflation declined to 2.50% YoY in February 2025, while consensus forecasts expect inflation to stabilize at 2.40% YoY by the end of 2025.

The Bank Indonesia (BI) Board of Governors Meeting (RDG) decided to maintain the benchmark interest rate at 5.75%, with the Deposit Facility Rate at 5.00% and the Lending Facility Rate at 6.50% as of March 19, 2025. This decision is part of an effort to support Indonesia’s economic growth targets and ensure inflation remains within the target range of 2.5±1% for 2025 and 2026. BI also focuses on maintaining a market-friendly Rupiah exchange rate stability through open market operations in the spot market, Domestic Non-Deliverable Forwards (DNDF), and Government Securities (SBN) in the secondary market. The RDG’s decision to keep the benchmark rate steady is influenced by global factors, including the high uncertainty surrounding the Trump administration’s policy direction, such as import tariffs on several U.S. trading partners and tax cuts contributing to a projected slowdown in the U.S. economy. As a result, BI anticipates the Fed Funds Rate (FFR) will decrease only once by 25 basis points in 2025, affecting the Dollar Index (DXY). Furthermore, BI assesses that Indonesia’s financial instruments, such as stocks, the Rupiah exchange rate, and Government Securities (SBN), remain fundamentally attractive. BI projects Indonesia’s economic growth 2025 to be between 4.7% and 5.5%, supported by indicators such as the strong Indonesian Consumer Survey Index.

Indonesia’s trade balance surplus (NPI) fell by 10.6% MoM to $3.12 billion in February 2025. This decline was driven by a 1.6% MoM decrease in the non-oil and gas surplus, which dropped to $4.84 billion in February 2025. The primary contributors to the surplus were animal and vegetable fats and oils, mineral and vegetable fuels, and iron and steel. Meanwhile, the oil and gas trade balance recorded a deficit of $1.72 billion in February 2025, primarily due to crude oil and petroleum product imports. Despite the decline, Indonesia’s trade balance surplus has remained intact for 58 consecutive months since May 2020.

US CPI headline inflation decreased by 30 bps to 0.2% MoM in February 2025 from 0.5% MoM in January 2025, falling below market expectations of 0.3% MoM. It was influenced by a 0.3% MoM increase in the shelter index in February 2025, accounting for nearly 50% of the monthly increase across all goods and services but was offset by a 4.0% MoM decrease in airline fares and a 1.0%MoM decline in fuel oil prices. Meanwhile, the energy index rose to 0.2% MoM with electricity and natural gas index increases. The food index also increased by 0.2% MoM in February 2025.Additionally, core inflation, which excludes food and energy items, fell 20 bps to 0.2% MoM in February 2025 from 0.4% MoM in January 2025 (Figure 1). It was primarily due to a 0.8% MoM decrease in transportation service prices.