Analyst: Geopolitical situation and holiday demand boost expectations for stabilizing short-term interest rates in Indonesia.

According to economists at Kenanga Investment Bank in a report, due to the effects of Ramadan and Eid al-Fitr spending, as well as the continued base effects of policy changes last year, Indonesia's short-term inflation rate may remain high, and then slow down from April as seasonal demand normalizes. Due to the high tension in the geopolitical situation caused by the US and Israeli attacks on Iran, the Indonesian central bank is currently expected to keep interest rates unchanged at its meeting in March, which is a shift from Kenanga's previous expectation of a rate cut in March, and the Indonesian central bank currently prioritizes the stability of the Indonesian rupiah. They also added that due to a weak exchange rate and fragile investor sentiment, the room for interest rate cuts has narrowed. Kenanga maintains its forecast of Indonesia's inflation rate for 2026 at 2.5%, higher than last year's 1.9%.