Broad money supply (M2) growth slowed to 5.2% YoY, reaching Rp9,390.0 trillion in April 2025, down from 6.1% YoY in May 2025. By component, M2 growth was driven by narrow money (M1) growth of 6.0% YoY and quasi-money growth of 2.4% YoY in March 2025. M2 growth was supported by M1 growth of 55.6%, consisting of 8.7% MoM growth in currency outside commercial banks and rural banks and 5.9% MoM growth in rupiah demand deposits, including electronic money and rupiah savings that can be withdrawn at any time, in April 2025. Meanwhile, on a monthly basis, M2 experienced a slight decrease of 0.49% MoM (Figure 1), in line with declining inflation in April 2025 following the normalization after the Religious Holiday (HBKN) was Hari Raya Idul Fitri.

Bank Indonesia's Board of Governors Meeting (BGM) has lowered interest rates by 25 bps to 5.5%, with a Deposit Facility Rate of 4.75% and a Lending Facility Rate of 6.25% on May 21, 2025. This decision aligns with controlled inflation targeting 2.5±1% for 2025 and 2026. Additionally, BI focuses on maintaining Rupiah exchange rate stability that is aligned with fundamental values and promoting sustainable economic growth amid global and domestic economic dynamics. Furthermore, BI strengthens the Macroprudential Liquidity Policy (KLM) to enhance credit growth financing in the MSME sector and promote flexibility in banking liquidity management. BI strategy to drive economic growth includes strengthening the rupiah exchange rate strategy through open market operations in Spot markets, Domestic Non-Deliverable Forward (DNDF) in domestic markets, and purchasing Government Bond Securities (SBN) in the secondary market to maintain financial market stability and adequate banking liquidity, strengthening pro-market monetary operations to reinforce interest rate reduction factors, accelerating money market and foreign exchange transactions, and maintaining attractive yields for foreign portfolio investments in domestic financial assets. BI also reduced the Macroprudential Liquidity Buffer (PLM) ratio by 100 bps to 4% from 5% for conventional commercial banks and the sharia PLM ratio by 100 bps to 2.5% from 3.5% for Islamic banks, effective on June 1st, 2025.

Consumer Confidence Index rose slightly to 121.7 in April 2025, driven by improvements in the Economic Condition Index despite a decline in consumer expectations. Income allocation shifted with decreased spending and debt repayment, while savings increased, reflecting normalization after the Eid al-Fitr holiday allowance. This change in consumer behavior contributed to a slowdown in retail sales growth, which contraction to 2.2% YoY, although monthly sales still showed moderate growth. Key sectors supporting sales included spare parts, accessories, and fuel, while communication and information equipment experienced significant declines.

Inflation in the United States rose by 0.2% MoM in April 2025 from 0.1% MoM in March 2025 but below market expectations of 0.3% MoM. This was influenced by a 0.7% MoM increase in the energy index in April, where higher natural gas and electricity indices offset a decline in the gasoline index. Meanwhile, the food index fell to 0.1% MoM in April 2025. Core inflation, which excludes food and energy, rose by 10 basis points to 0.2% MoM in April 2025 from 0.1% MoM in March 2025. This increase was mainly driven by a 0.3% MoM rise in the rent index, which accounts for more than 50% of core inflation, up from 0.1% MoM in March 2025.

Indonesia’s foreign exchange reserves decreased by 2.93% MoM to US$ 152.5 billion in April 2025, down from US$ 157.1 billion in March 2025. This decline was primarily driven by government external debt repayments and currency stabilization measures in response to heightened global financial market uncertainty. Despite the decrease, the current level of reserves remains robust, equivalent to the financing of 6.4 months of imports or 6.2 months of imports, and government external debt payments are well above the international adequacy standard of approximately 3 months of imports.

The Fed has maintained the interest rate at 4.25%-4.50% at the Federal Open Market Committee (FOMC) meeting on May 7, 2025. The Fed Committee assessed that the latest economic indicators continue to show solid expansion in the US economy. The unemployment rate has remained stable at low levels in recent months, and the labor market remains strong, even though inflation data is still relatively high and the value of the trade balance continues to fluctuate.

The S&P Global US Manufacturing PMI stood at 50.2 in April 2025, unchanged from the previous month. It indicates only marginal expansion, as output declined for the second consecutive month despite a fourth month of growth in new orders, mainly driven by domestic demand. However, export orders have fallen sharply since November due to tariff-related pressures and expectations of retaliatory tariffs, significantly reducing export sales. As a result, business confidence dropped to its lowest level since June 2024. Additionally, both input costs and output prices surged, mainly due to tariffs, prompting firms to raise selling prices and reduce headcount to protect profit margins.

Indonesia's economic growth, as measured by Gross Domestic Product (GDP), was recorded at 4.87% year-on-year (YoY) in 1Q25, down from 5.02% YoY in 4Q25 and below the market consensus of 4.91% YoY. The nominal GDP in 1Q25 stood at IDR 5,665.9 trillion, while the GDP at constant prices was IDR 3,264.5 trillion. All expenditure components posted growth except for government spending, which contracted by 1.38% YoY due to budget efficiency policies at the central government level. The most significant contributor to GDP was household consumption, accounting for 54.53% of total GDP and growing by 4.89% YoY. Gross Fixed Capital Formation (GFCF), which represents investment in capital goods with a useful life of more than one year and is not for immediate consumption, contributed 30.34% to total GDP and grew by 2.12% YoY

Indonesia’s Consumer Price Index (CPI) recorded an annual inflation rate of 1.95% year-over-year (YoY) in April 2025, up from 1.03% YoY in March 2025. This realization exceeded the consensus estimate of 1.50% YoY. Core inflation increased slightly to 2.50% YoY in April from 2.48% YoY in March. Key contributors to core inflation included gold jewelry and automobiles. Meanwhile, the volatile food group saw inflation of 0.64% YoY in April, mainly driven by higher prices for bird’s eye chili, red chili, shallots, garlic, and coconut. The administered prices group posted a 1.25% YoY inflation rate, mainly from tap water tariffs, machine-made kretek cigarettes, and hand-rolled kretek cigarettes

U.S. economic growth contracted by 0.30% QoQ in the first estimate for 1Q25, down from 2.40% in 4Q24, according to the U.S. Bureau of Economic Analysis, and fell short of market expectations for a 0.3% QoQ expansion. This contraction aligns with a slowdown in the headline inflation indicator, the Personal Consumption Expenditure (PCE) Index, which eased to 2.30% YoY in March 2025 from 2.70% YoY in February 2025. Meanwhile, the unemployment rate in April 2025 is expected by market consensus to remain stable at 4.2%, after a slight increase from 4.2% in February 2025 to 4.2% in March 2025, with the official release scheduled for today (5/2).