Bank Indonesia is expected to hold its benchmark interest rate at 4.75% through 2026, according to a Reuters poll, as the conflict involving Iran introduces fresh inflation risks that complicate any path toward monetary easing. The central bank's rate has been steady, and the poll signals that external shocks, not domestic conditions alone, are now the dominant constraint on policy flexibility. The Iran conflict is flagged as a source of upward pressure on commodity and energy prices, which feed directly into Indonesian inflation and complicate the rupiah's stability. For Indonesia, a net commodity exporter with import dependencies in energy and consumer goods, sustained geopolitical disruption raises the cost of any premature rate cut. Investors and corporates pricing in rate relief through 2025 or early 2026 should recalibrate: the poll suggests the hold is durable, not transitional. The next inflection point will likely hinge on how oil markets and regional trade flows respond to the Iran situation in the months ahead.
US inflation hit 4.1% in May 2026, its highest level in three years, driven by rising energy prices, keeping a Federal Reserve rate hike in September firmly on the table. Consumer spending rose on tax refunds and a stock market rally, while business investment in AI equipment also rebounded.
RBI data through May 2026 shows that its 85 basis point repo rate cuts since February 2025 are only partially reaching borrowers, with lending rate transmission described as moderated. Slower pass-through limits relief for loan holders and may pressure the RBI to cut rates further to achieve its growth goals.
U.S. consumer prices rose at a 4.2% annual rate in May, the fastest pace in three years, driven by a spike in energy costs. The reading puts pressure on the Federal Reserve to respond, with potential knock-on effects for interest rates, borrowing costs, and household purchasing power.
US inflation rose to a three-year high in May, driven by surging gas and energy prices tied to the Middle East conflict. The reading complicates the Federal Reserve's path toward cutting interest rates and keeps pressure on household budgets.
