- The Fed lowered the FFR to 4.50-4.75%, sparking a risk-on sentiment as US stocks rose following the meeting. However, long-term US interest rates continue to climb despite the lower FFR, driven by anticipated policy shifts following the US election.
- The rise in long-term UST yields underscores the risk of capital outflows from riskier markets, potentially restricting further policy rate cuts in 2025, particularly if increased import tariffs contribute to renewed inflationary pressures in the US.
- The improving FX liquidity condition in Indonesia may help to protect the Rupiah from short-term volatilities, creating a space for BI to consider a rate cut in the upcoming meeting.
