Fixed Income Update 17 Jul 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 17 July 2025
Pro-Growth Remains The Stance, but Risks Persist
Earlier this week, he imposed a 19% tariff on Indonesian imports—lower than the previously threatened 32%—but with higher duties on goods transshipped to circumvent existing tariffs. In response, Indonesia agreed to lower tariffs on U.S. exports and pledged to purchase USD15.0 bn in U.S. energy products, USD4.5 bn in agricultural goods, and 50 Boeing aircraft, although the timeline for implementation remains uncertain.
President Trump announced on Wednesday that he would send letters to over 150 countries ahead of a new wave of tariffs set to take effect on 1 Aug ‘25, including levies on pharmaceutical imports and semiconductors.
Meanwhile, Bank Indonesia’s 25 bps rate cut yesterday reaffirmed its pro-growth stance maintained since the beginning of this year. We expect this move to help lower domestic funding costs, support credit demand and improve liquidity. However, it also raises concerns over the potential delay in further Rupiah appreciation. Accordingly, we have revised down our BI rate projection for end-2025 by 25–50 bps compared to our earlier forecast at the start of the year.
Regards,
KBVS Research Team