Blog | Enquirer News

Bank Indonesia to Hold Rates Amid Rupiah Pressure, Cuts Expected Next Quarter

Finance

-

Bank Indonesia to Hold Rates Amid Rupiah Pressure, Cuts Expected Next Quarter

Bank Indonesia (BI) is expected to maintain its benchmark interest rate at 5.75% on Wednesday to prevent further depreciation of the rupiah amid rising global trade tensions, according to a Reuters poll. However, the central bank is projected to begin rate cuts next quarter to support economic growth.

Southeast Asia’s largest economy expanded just over 5% in 2024, mirroring the previous year’s pace but marking the slowest growth in three years. This falls significantly short of President Prabowo Subianto’s ambitious 8% target.

Rupiah Stability vs. Growth

While BI Governor Perry Warjiyo acknowledged the need for stimulus last month, the central bank remains cautious as the rupiah has weakened by 2% this year despite repeated forex interventions.

In a March 10-17 survey of 31 economists, 19 expected the central bank to keep rates unchanged, while 12 predicted a 25-basis-point cut. Additionally, the overnight deposit and lending facility rates are expected to remain steady at 5.00% and 6.50%, respectively.

“Similar to the February meeting, conditions for a cut… are not favorable. There has been renewed weakness in the rupiah,” said Sanjay Mathur, Chief Economist for Southeast Asia and India at ANZ. “As such, the rate-cutting cycle remains intact, but the timing of each cut will depend on FX stability.”

Global Trade Tensions and Trump’s Tariff Risks

Median forecasts predict a 25-basis-point cut in the next quarter, but there is no clear consensus among economists, given uncertainties surrounding President Donald Trump’s trade policies.

The risk of rising U.S. inflation due to Trump’s erratic tariffs is expected to keep the Federal Reserve from cutting rates, forcing BI to prioritize currency stability amid capital outflow concerns.

“Global uncertainty, particularly concerning the inward-looking and protectionist policies of the U.S., will persist and may even intensify,” said Josua Pardede, Chief Economist at Permata Bank.

“In financial markets, the repercussions of trade war risks have already been felt, as many investors have adopted a risk-off approach, leading to capital outflows. This will inevitably impact the stability of the rupiah exchange rate,” Pardede added.

Outlook: Rate Cuts Likely, But Timing Uncertain

With external risks mounting and growth slowing, BI is expected to shift toward rate cuts later in the year. However, the timing will depend on market stability and the trajectory of U.S. trade policies.

Fed Holds Rates, but Trump’s Policies Pressure Future Cuts

Finance

-

0

Fed Holds Rates, but Trump’s Policies Pressure Future Cuts

After implementing 100 basis points (bp) of interest rate cuts in late 2024, Federal Reserve Chair Jerome Powell has indicated that the Fed is in no hurry to ease policy further. While a rate hold is widely expected at the upcoming March 19 meeting, President Donald Trump’s spending cuts and trade protectionist policies are weighing on growth prospects, potentially forcing the central bank’s hand in the second half of 2025.

The Economy Isn’t Living Up to Expectations

At the start of the year, optimism ran high. Many expected Trump’s return to the White House to turbocharge growth through tax cuts and deregulation. However, his administration’s **initial focus on government spending cuts and trade protectionism** has dampened expectations.

Concerns are rising about job losses, particularly among federal workers and government contractors. Simultaneously, escalating tariffs—intended to reshore manufacturing—are raising fears of **higher consumer prices and squeezed corporate profit margins**. Reciprocal tariffs from global partners and potential consumer boycotts could further strain US exports.

Fed Remains Cautious Amid Cooling Growth

Disappointing economic data and persistent trade tensions have dampened investor sentiment. While recession fears are growing, Powell has played down these concerns, stating in a **March 7 speech** that the U.S. economy remains in a “good place.”

The Fed is expected to largely maintain its previous **December 2023 projections**, signaling **two 25bp rate cuts** for 2025. With unemployment still low and inflation above target due to tariff-driven price increases, the Fed has no pressing need for further cuts in the near term. However, as housing inflation cools in late 2025, this could open the door for **additional rate cuts in September and December**, followed by another in **March 2026**.

Treasury Market Watches Quantitative Tightening

Markets are also closely watching the Fed’s approach to **Quantitative Tightening (QT)**. Despite Powell’s vague remarks in the last FOMC meeting, meeting minutes confirmed that QT was a key discussion point.

At the current pace, **bank reserves could drop to $3 trillion by mid-2025**, nearing the threshold where the Fed may feel compelled to halt QT. When QT ends, the Fed will resume **purchasing Treasury securities**, injecting more liquidity into the market.

Implications for the US Dollar

If Powell successfully **calms recession fears** and reaffirms expectations for **just two rate cuts in 2025**, the **US dollar could strengthen**. However, this could put additional pressure on **US stocks and exports**.

The EUR/USD rally has been fueled by weaker US economic data and a dovish Fed outlook. If Powell signals confidence in growth, **the dollar may regain strength**, particularly against the Japanese yen, Scandinavian currencies, and even the euro.

Dow Drops 630 Points as Tariff War Escalates

Finance

-

0

Dow Drops 630 Points as Tariff War Escalates

The Dow Jones Industrial Average tumbled by 630 points, or 1.53%, on Thursday, while the S&P 500 slid 1.6% and the Nasdaq Composite dropped 2.2%. If the S&P 500 closes at 5,529.73 or below, it will officially enter market correction territory.

Tariff Threats Weigh on Markets

President Donald Trump intensified trade tensions by threatening to impose a 200% tariff on alcoholic beverages from the European Union. This came after the EU announced a 50% tariff on U.S. spirits, including bourbon, in retaliation for Trump’s sweeping 25% tariffs on steel and aluminum.

Markets initially shrugged off the tariff news on Wednesday, but selling pressure resumed Thursday as concerns over the trade dispute between Washington and Brussels escalated. The ongoing uncertainty around Trump’s tariff policy has contributed to volatility in U.S. markets.

Economic Growth Concerns

“Tariff uncertainty has captured most of the blame for the selling pressure and is exacerbating economic growth concerns,” said Adam Turnquist, chief technical strategist at LPL Financial.

U.S. Treasury Secretary Scott Bessent, speaking on CNBC, downplayed market fears, stating that he is not worried about “a little bit of volatility over three weeks.” Bessent added that the Trump administration remains focused on the “real economy” and long-term growth.

Volatility Surges

Wall Street’s fear gauge, the Cboe Volatility Index (VIX), surged this week to its highest level since December. CNN’s Fear and Greed Index has signaled “extreme fear” in the markets since late February.

The S&P 500 is now down more than 6% in 2025, underperforming major indexes in Europe and Asia.

China Criticizes Walmart Over Supplier Price Cuts Amid Tariffs

World

-

0

China Criticizes Walmart Over Supplier Price Cuts Amid Tariffs

China’s Ministry of Commerce has held talks with Walmart after reports emerged that the U.S. retail giant requested price cuts from Chinese suppliers to offset the impact of rising U.S. tariffs.

Walmart’s Price Cut Request Sparks Controversy

According to a report from Bloomberg, Walmart has asked Chinese suppliers, including those producing kitchenware and clothing, to lower prices by as much as 10% in response to U.S. tariffs. The Chinese Ministry of Commerce responded sharply, stating that such a demand is “unreasonable” and disrupts fair competition and foreign trade order.

Tariff Pressure and Supply Chain Risks

Chinese authorities warned that Walmart’s actions could create risks of supply chain disruptions and negatively impact both Chinese and American businesses, as well as U.S. consumers. They urged companies to work together in addressing the economic challenges posed by U.S. tariffs rather than shifting the burden onto suppliers.

Tariff Escalation and Economic Impact

President Donald Trump’s latest 10% duty on Chinese goods took effect on March 4, following a similar tariff increase on February 4. Many Chinese suppliers already operate on thin profit margins, making Walmart’s pricing demands particularly difficult to absorb.

Potential Retaliation and Market Response

China’s state media suggested that further actions could be taken if Walmart does not reconsider its approach. The ongoing trade tensions continue to put strain on global supply chains and could lead to further disruptions in international commerce.

U.S. Tariffs Take Effect, Sparking Recession Fears

Finance

-

0

U.S. Tariffs Take Effect, Sparking Recession Fears

As new U.S. tariffs go into effect, concerns over an impending economic downturn are mounting. President Donald Trump further fueled uncertainty over the weekend, stating on Fox News’ Sunday Morning Futures, “Look, we’re going to have disruption, but we’re OK with that.”

Rising Consumer Concerns

Consumers are increasingly worried about their financial future. A New York Federal Reserve survey released Monday found that 27.4% of households expect a worsening financial situation in the next year, the highest since November 2023.

Additionally, the perceived likelihood of missing a minimum debt payment in the next three months surged to 14.6%, the highest since April 2020, near the start of the COVID-19 pandemic.

Inflation and Household Budgets

“The past few months have shown a resurgence in price increases in many food and energy products,” said Greg McBride, chief financial analyst at Bankrate.com. “Coupled with shelter costs that continue to increase faster than many workers’ wages, the pressure on household budgets is unrelenting.”

Economists say Trump’s tariffs on imports from Canada, China, and Mexico will likely drive up prices on essential consumer goods. A recent survey found that 86% of Americans believe trade tensions will negatively impact their personal finances.

Consumer Confidence Drops

The Conference Board’s consumer confidence index saw its steepest drop since August 2021, while the University of Michigan’s consumer sentiment index indicated heightened fears of renewed inflation.

“Millions of Americans are doing okay right now, but feel like their financial situation could go from pretty good to pretty dicey in a hurry if they were to encounter a job loss, a medical emergency, or some other unexpected event,” said Matt Schulz, chief credit analyst at LendingTree.

Looking Ahead

With tariffs in place and economic uncertainty growing, economists warn that the next few months could bring further volatility. Market analysts will be closely watching inflation trends and consumer spending behaviors to gauge the broader impact of Trump’s trade policies.

US Credit Risk Gauges Reach 2025 High Amid Economic Concerns

Finance

-

0

US Credit Risk Gauges Reach 2025 High Amid Economic Concerns

US credit risk gauges surged to their highest levels this year on Monday as investors expressed fresh concerns about the state of the economy in light of tariffs and deep federal workforce cuts.

Credit Market Reacts to Economic Uncertainty

As several investment-grade borrowers reconsider issuing bonds, the Markit CDX North American Investment Grade Index widened by as much as 2.06 basis points to 53.54, marking a new high for 2025. This index rises as credit risk escalates. Meanwhile, the Markit CDX North American High Yield Index, which typically falls when credit risk increases, declined by 0.5 points to 106.4, hitting its lowest level in six months.

Global Equities Decline

Stock markets worldwide opened the week with losses as investors weighed the potential economic consequences of US policy shifts. On Friday, the Nasdaq 100 Index officially entered correction territory, reflecting ongoing uncertainty. A mixed US jobs report released last week failed to provide reassurance to nervous investors.

Recession Concerns Grow

While a US recession in 2025 remains unlikely, it is no longer considered unthinkable by major financial institutions. Barclays Plc strategists, led by Bradley Rogoff and Dominique Toublan, noted in a Friday report that a downturn—if it happens—would likely be driven by weakened consumer spending.

“We increasingly view a large-scale pullback in spending driven by uncertainty about tariffs, DOGE layoffs, and equity market weakness as a non-trivial tail risk,” the Barclays analysts wrote.

Market Outlook

With growing volatility in the credit markets and broader economic concerns, investors will be closely monitoring upcoming policy developments and economic indicators for further direction.

US Trade Deficit Hits Record High as Imports Surge

World

-

0

US Trade Deficit Hits Record High as Imports Surge

The US trade deficit widened to an all-time high in January as businesses rushed to import goods ahead of newly imposed tariffs, raising concerns that trade could weigh on economic growth in the first quarter.

Trade Deficit Surges

The trade gap jumped 34.0% to a record $131.4 billion from a revised $98.1 billion in December, marking the largest percentage increase since March 2015, according to data from the Commerce Department’s Bureau of Economic Analysis (BEA).

Economists polled by Reuters had expected a smaller increase to $127.4 billion. The surge comes in response to President Donald Trump’s latest round of tariffs, which imposed a 25% levy on imports from Mexico and Canada and doubled duties on Chinese goods to 20%, escalating trade tensions.

Imports Reach Record Levels

Total imports soared 10.0% to $401.2 billion, the biggest increase since July 2020. Goods imports rose a record 12.3% to $329.5 billion, driven by:

A $23.1 billion increase in industrial supplies and materials, primarily finished metal shapes, likely gold.
A $6.0 billion rise in consumer goods, led by pharmaceutical products, cell phones, and household goods.
A $4.6 billion increase in capital goods, including computers, accessories, and telecom equipment.

Imports of services also edged up by $0.4 billion to $71.7 billion, fueled by intellectual property charges and other business services. However, travel service imports declined.

Exports Show Modest Growth

Total exports rose 1.2% to $269.8 billion, with goods exports increasing 1.6% to $172.8 billion. Key drivers included:

A $4.2 billion jump in capital goods, including civilian aircraft, semiconductors, and engines.
A $1.7 billion rise in consumer goods, led by pharmaceutical preparations and jewelry.

However, food exports dropped by $1.0 billion, mainly due to a $0.8 billion decline in soybean exports. Meanwhile, service exports rose $0.6 billion to $97.0 billion, supported by financial and technology-related services.

Impact on Economic Growth

The widening trade deficit, combined with a slowdown in consumer spending, has raised concerns about a potential economic contraction in Q1. However, some economists argue that a large portion of the import surge came from gold, which is largely driven by financial market activity rather than US domestic demand.

“Most gold imports into the US are unrelated to domestic production or consumption and instead fluctuate based on demand from gold market participants, so the BEA excludes them altogether from the national accounts,” Goldman Sachs noted.

GDP Outlook

The Atlanta Federal Reserve now forecasts that US GDP will contract by 2.8% on an annualized basis in Q1, compared to a 2.3% growth rate in the previous quarter.

With ongoing trade uncertainty and tariffs impacting global supply chains, economists are closely monitoring future trade reports for signs of further disruptions.

Seven & i Appoints First Foreign CEO Amid Takeover Battle

Business

-

0

Seven & i Appoints First Foreign CEO Amid Takeover Battle

Seven & i Holdings, the Japanese operator of 7-Eleven, has appointed its first foreign CEO as it seeks to fend off a $47 billion takeover bid by Alimentation Couche-Tard (ACT) and implement a major restructuring plan.

Leadership Change and Strategic Overhaul

Stephen Dacus, a lead outside director, will replace Ryuichi Isaka as CEO on May 27. Addressing reporters in Japanese and English, Dacus stated that discussions with Couche-Tard would continue, but significant regulatory obstacles could prevent a merger.

“What I do not think our shareholders would want is for us to spend two plus years in limbo just for that to be rejected by the U.S. courts,” Dacus said.

Major Business Restructuring

As part of its restructuring, Seven & i announced the sale of its superstore unit to Bain Capital for 814.7 billion yen ($5.5 billion) and a reduction of its stake in Seven Bank below 40%. The company also plans to buy back about 2 trillion yen worth of shares through 2030 and list its North American convenience store business by 2026.

The move follows long-standing investor criticism over capital allocation and an unsuccessful $58 billion buyout attempt by the Ito family group.

Market Reaction and Analyst Perspectives

Seven & i shares surged 6.1% following reports of the share buyback plan. Analysts view the move as a defensive strategy against Couche-Tard.

“The buyback looks like an attempt to lift market value and fend off Couche-Tard,” said Lorraine Tan, regional director at Morningstar.

However, some analysts believe the restructuring may not derail ACT’s takeover ambitions. “Because the IPO is not for a while, there is still time for ACT to make a deal for the whole shebang,” said Travis Lundy, an analyst at Smartkarma.

Criticism of Isaka’s Tenure

Isaka, who has been with the company since 1980 and served as CEO since 2016, faced criticism from investors such as ValueAct Capital for his strategic decisions. His leadership saw Seven & i acquire Speedway gas stations for $21 billion in 2020, significantly expanding its North American footprint but at a price some believe was excessive.

Independent retail analyst Akihito Nakai commented, “They jumped into the global market before they had a solid foundation in place. In hindsight, they got the order wrong.”

Future Strategy Focused on Fresh Food

Dacus signaled that the company will continue its fresh-food expansion strategy, which has been central to 7-Eleven’s success in Japan. He noted plans to bring high-quality Japanese food products to U.S. stores.

“If we can bring that same quality of food to our stores in the U.S., that would be a huge and sustainable source of growth,” he said.

Regulatory and National Security Considerations

If ACT succeeds, it would be the largest foreign takeover of a Japanese company. Seven & i was classified as “core” to Japan’s national security in September, but the finance ministry has indicated this would not create regulatory barriers for a potential deal.

U.S. Private Sector Job Growth Slows Sharply in February

Finance

-

0

U.S. Private Sector Job Growth Slows Sharply in February

Private sector job creation slowed significantly in February, raising concerns about an economic downturn, payroll processing firm ADP reported Wednesday.

Job Growth Falls Below Expectations

Companies added just 77,000 new workers in February, a sharp decline from the upwardly revised 186,000 in January. The figure also fell well short of the 148,000 consensus estimate from Dow Jones, marking the slowest job growth since July.

The data comes amid growing concerns that the U.S. economy is losing momentum, particularly as President Donald Trump’s tariff policies raise fears of renewed inflation. ADP reported that annual pay growth remained steady at 4.7% in February.

Market Reaction and Economic Uncertainty

Following the report, stock market futures pared their earlier gains while Treasury yields remained mixed.

“Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” said ADP Chief Economist Nela Richardson. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”

Despite overall positive economic indicators, business sentiment surveys have reflected rising concerns about the impact of Trump’s tariffs. Some economists fear a worst-case scenario of stagflation, where slowing economic growth is coupled with rising prices.

Job Gains and Losses by Sector

The February ADP report highlighted notable declines in key sectors:

Trade, transportation, and utilities: -33,000 jobs
Education and health services: -28,000 jobs
Information services: -14,000 jobs

Despite Trump’s commitment to expanding artificial intelligence-related industries, uncertainty in the AI sector contributed to the job losses in information services.

However, some industries reported job gains:

Leisure and hospitality: +41,000 jobs
Professional and business services: +27,000 jobs
Financial activities and construction: +26,000 jobs each
Manufacturing: +18,000 jobs

Interestingly, job growth was nearly balanced between services (+36,000) and goods-producing sectors (+42,000), a rare occurrence in the service-dominated U.S. economy.

Employment Growth by Company Size

Large businesses saw the most job growth, with companies employing 500 or more workers adding 37,000 jobs. Meanwhile, small businesses with fewer than 50 employees shed 12,000 positions.

Looking Ahead: The Official Jobs Report

The ADP report serves as a precursor to the official U.S. Bureau of Labor Statistics (BLS) nonfarm payrolls report, due Friday. However, the two reports often diverge due to differing methodologies. In January, the BLS reported private payroll growth of just 111,000—well below ADP’s estimate.

Economists surveyed by Dow Jones expect the Friday report to show an increase of 170,000 jobs and an unemployment rate holding steady at 4%.

A Warning Sign for the Labor Market?

The sharp slowdown in private sector hiring could be an early indicator of economic turbulence ahead. As businesses assess ongoing policy uncertainty and trade tensions, labor market trends in the coming months will be closely watched.

Amazon Expands AI Efforts with New Nova “Reasoning” Model

Tech

-

0

Amazon Expands AI Efforts with New Nova “Reasoning” Model

Amazon (NASDAQ:AMZN) is making a significant push in the AI race with plans to launch a new “reasoning” model under its Nova brand by June. This AI system is designed to compete directly with OpenAI and Anthropic by combining fast response times with advanced long-form reasoning capabilities.

Amazon’s AI Strategy and Cost Leadership

The goal for Amazon is clear: secure a top-five ranking in key AI benchmarks for software development and math proficiency while maintaining lower costs than its rivals. Amazon’s existing Nova models are already 75% cheaper than third-party options on its Bedrock AI platform, positioning the company as the cost leader in an increasingly competitive market.

Competing on Multiple Fronts

Despite investing $8 billion into Anthropic—one of its AI competitors—Amazon is aggressively developing its proprietary AI technology. This move comes as Anthropic launches its Claude 3.7 Sonnet model, which employs a similar hybrid reasoning approach. Meanwhile, with Google (NASDAQ:GOOG) and OpenAI advancing their own AI initiatives, the industry’s arms race continues to escalate.

Investor Skepticism and Market Challenges

Wall Street remains cautious about Amazon’s AI strategy. While its cloud division, Amazon Web Services (AWS), saw a 19% year-over-year revenue increase to $28.79 billion last quarter, overall growth has slowed, raising concerns about whether AI investments will drive meaningful financial gains.

Adding to these concerns, lower-cost AI models from Chinese competitor DeepSeek are disrupting the market, intensifying competition and pressuring profit margins. With Amazon heavily investing in AI, the coming months will be crucial in determining whether this strategy yields long-term rewards or becomes another costly bet in an increasingly saturated industry.

A High-Stakes AI Bet

Amazon’s commitment to AI development signals its intent to dominate the space rather than rely solely on external players. However, with rising competition and investor skepticism, the company must demonstrate that its AI investments will translate into sustainable growth and market leadership.