Fed Interest Rate Cut Provides Positive Momentum for Indonesian Capital Markets

Key Points

• The Fed cut its benchmark interest rate by 25 basis points to 3.75-4.00 percent, marking the end of the global monetary tightening phase.

• Global liquidity is expected to improve as balance sheet runoff ends on December 1, 2025, opening up opportunities for capital inflows into emerging markets, including Indonesia.

• The JCI has the potential to break through the 8,320 resistance level, supported by foreign capital inflows and positive sentiment towards the end of the year.

Jakarta – The United States (US) Central Bank, the Federal Reserve (The Fed), cut its benchmark interest rate by 25 basis points to 3.75-4.00 percent at its October 2025 meeting.

The decision, which was approved by a vote of 10 to 2, reflects differences in opinion among FOMC members, with some still assessing that inflationary pressures need to be watched, while others see the need to support economic growth.

Chief Economist of BRI Danareksa Sekuritas (BRIDS), Helmy Kristanto, considers the Fed’s move an important signal that the phase of global monetary tightening is coming to an end.

“The Fed’s interest rate cut shows a more balanced policy direction. Global liquidity has the potential to improve, providing room for developing countries such as Indonesia to maintain stability without high interest rate pressure,” Helmy said in his research quoted on Wednesday, November 5, 2025.

Furthermore, BRIDS views the Fed’s policy of stopping balance sheet runoff as of December 1, 2025, as strengthening the signal of global liquidity easing.

This condition is expected to accelerate capital inflows into emerging markets, including Indonesia, which has attractive asset yields and solid economic growth prospects.

According to Helmy, market sentiment has begun to turn positive as global interest rates decline. With inflation under control, stable economic growth, and ample policy space, Indonesia is considered to have strong resilience compared to other countries in the region.

“These conditions make the Indonesian market potentially attractive to investors, even amid global uncertainty,” he added.

JCI Potentially Breaks Through Resistance at 8,320

The decline in global interest rates has also been followed by increased foreign investor interest in the Indonesian market. Foreign funds have been flowing into stocks and bonds in recent days.

Meanwhile, from a technical perspective, BRIDS Customer Engagement and Market Analyst Department Head Chory Agung Ramdhani said that the Composite Stock Price Index (IHSG) is still in a solid upward trend, with prices moving above the short and medium-term averages.

The index has reached 8,180, approaching resistance at 8,320, while crucial support is in the 7,989 area.

BRIDS assesses that the Fed’s interest rate cut will be a strong fundamental catalyst and has the potential to push the JCI to break through the resistance level of 8,320, as long as the support area remains intact.

In addition, BRIDS also sees that looser global conditions will provide an additional boost to the Indonesian financial market towards the end of the year.

With improving global liquidity and the return of foreign funds, the domestic stock market has the opportunity to continue its upward trend.

This situation also has the potential to strengthen window dressing sentiment, when investors increase their buying activity at the end of the year. (*)

Editor: Yulian Saputra