Consumer confidence in February 2025 slightly decreased, as indicated by a drop in the overall Consumer Confidence Index, primarily due to lowered expectations regarding future job prospects. However, economic conditions, such as purchases of durable goods and income, showed positive growth. This shift in sentiment is accompanied by consumers prioritizing immediate spending over savings and debt repayment, potentially influenced by high interest rates. This is reflected in a projected retail sales growing on monthly basis because upcoming to Ramadhan.

The US labor market conditions in February 2025 were favorable, marked by three labor data indicators: unemployment rate, nonfarm payrolls, and wage growth rate. This data indicates that the US economy is improving despite The Fed's tendency to maintain a hawkish stance since the last 25bps cut on December 18, 2024. The unemployment rate slightly increased to 4.1% in February 2025 from 4.0% in January 2025 and above market expectations of 4%.

Indonesia's foreign exchange reserves declined by 1.02% MoM to US$154.5 billion in February 2025 from US$156.1 billion in January 2025. It was influenced by government foreign debt payments and rupiah exchange rate stabilization policies in response to persistently high global financial market uncertainties. Nevertheless, the current level of foreign exchange reserves remains high, equivalent to 6.6 months of imports or 6.4 months of imports and government foreign debt payments. It stands above the international adequacy standard of approximately 3 months of imports.

In February 2025, the U.S. manufacturing sector presented a mixed picture, with the S&P Global US Manufacturing PMI indicating growth driven by increased demand and potential tariff-related stock replenishment, while the ISM US Manufacturing PMI showed a slight decline due to weakened demand and tariff-induced operational shocks. Simultaneously, the services sector experienced a slowdown according to the S&P Global US Services PMI, facing challenges from weak demand and rising labor costs, though the ISM US Services PMI remained in an expansion phase. A key factor influencing both sectors was the impact of new administration tariff policies, which led to price increases, potential supply disruptions, and concerns about rising raw material costs, creating uncertainty and affecting business operations.  

US economic growth expanded by 2.30% QoQ in the second estimate for 4Q24, down from 3.10% in 3Q24, as reported by the US Bureau of Economic Analysis and in line with market expectations. Nevertheless, the headline Personal Consumption Expenditure (PCE) inflation slowed to 2.50% YoY in January 2025 from 2.60% YoY in December 2024. Meanwhile, the unemployment rate in February 2025 is expected to remain steady at 4.0%, with data scheduled for release this week (3/7)

Indonesia's Consumer Price Index (CPI) recorded a deflation of 0.09% YoY in February 2025, down from 0.76% YoY in January 2025, marking the lowest level since 2000. This realization was lower than the consensus forecast of 0.41% inflation. Core inflation increased to 2.48% YoY in February 2025 from 2.36% YoY in January 2025. Commodities contributing to core inflation included jewelry, ground coffee, and rice with side dishes. Meanwhile, the volatile food group experienced inflation of 0.56% YoY in February 2025, down from 3.07% YoY in January 2025, primarily supported by price increases in chicken meat, shallots, and red chilies. Government-administered prices experienced deflation of 9.02% YoY in February 2025 from 6.41% YoY deflation in January 2025, with significant contributions from electricity tariff discounts and non-subsidized fuel price reductions

Balance of Payment: US$ 7.9 billion Current Account: US$ -1.1 billion Capital and Financial Account : US$ 8.5 billion Indonesia's Balance of Payments (BOP) surplus increased by 34.1% QoQ to US$7.9 billion in 4Q24. It was supported by a portfolio investment surplus of US$8.5 billion, while the current account recorded a deficit of US$1.1 billion, or 0.3% of Indonesia's Gross Domestic Product (GDP). Meanwhile, foreign exchange reserves grew by 3.9% to US$155.7 billion, equivalent to 6.5 months of import financing throughout 2024. By PHINTRACO SEKURITAS | Research - Disclaimer On -

BI Maintains Interest Rate, Prioritizes Rupiah Stability Amid Global Uncertainty BI 7-day Repo Rate: 5.75% Deposit Facility: 5.00% Lending Facility: 6.50% The Bank of Indonesia's Board of Governors Meeting (RDG BI) maintained the interest rate at 5.75%, with a Deposit Facility Rate of 5.00% and a Lending Facility Rate of 6.50% on February 19, 2025. Additionally, BI observed The Fed's interest rate policy, which is expected to cut rates only once by 25 bps in early 2H25. US Treasury Yields (UST) for 10-year and 2-year bonds are expected to remain high due to fiscal deficit planning of 7.7% and 8.8% in 2025 and 2026, respectively, and discussions about eliminating the debt ceiling. The Dollar Index (DXY) also remains strong, reaching its highest level in the past year at 109.77, putting pressure on the rupiah against the US dollar. BI focuses on exchange rate stability to maintain economic growth amid ongoing global turbulence through open market operations in Spot markets, Domestic Non-Deliverable Forward (DNDF), and Government Securities (SBN) in the secondary market. BI considers its efforts successful in maintaining exchange rates at levels comparable to or in line with the currency pair groups of countries such as China, Korea, Malaysia, and Singapore. By PHINTRACO SEKURITAS | Research - Disclaimer On -

Headline Inflation: 0.50% MoM Headline Inflation: 3.00% YoY Core Inflation: 0.40% MoM Core Inflation: 3.30% YoY U.S. headline inflation rose by 10 basis points to 0.5% MoM in January 2025, from 0.4% MoM in December 2024 and above market expectations of 0.3% MoM. This increase was influenced by a 0.4% MoM rise in the shelter index in January 2025, accounting for nearly 30% of the monthly increase across all goods and services. The energy index rose to 1.1% MoM, with the most significant contributor being the fuel oil index, which increased by 6.2% MoM in January 2025. The food index also increased by 0.4% MoM in January 2025. Additionally, core inflation, which excludes food and energy items, rose by 20 basis points to 0.4% MoM in January 2025 from 0.2% MoM in December 2024. This was due to increased prices for used cars and trucks, as well as hotel accommodation services, which resulted from wildfires in Los Angeles. By PHINTRACO SEKURITAS | Research - Disclaimer On -

Consumer Confidence Index: 127.2 Retail Sales: -4.8% MoM* | 0.4% YoY* *preliminary Indonesia's Consumer Confidence Index (CCI) dipped slightly in January 2024, driven by a decrease in the assessment of current economic conditions, likely due to government budget efficiency policies. However, consumer expectations for the future improved, potentially influenced by declining interest rates. This shift is also reflected in household spending, with a smaller proportion allocated to consumption and a larger share going towards debt payments. Furthermore, retail sales growth is expected to slow significantly in January 2025, following a period of increased spending during the holiday season. By PHINTRACO SEKURITAS | Research - Disclaimer On -