The Fed Cuts Interest Rates, BRIDS Sees Positive Momentum for Indonesia’s Capital Market

Jakarta, 3 November 2025 – The Federal Reserve cut its benchmark interest rate by 25 basis points to a range of 3.75%–4.00% at its October meeting, marking the second consecutive rate reduction in the current policy easing cycle. The decision, approved by a 10–2 vote, reflected differing views among FOMC members — some continued to see inflationary pressures as a concern, while others viewed more room to support economic growth.

BRIDS Chief Economist Helmy Kristanto stated that the Fed’s move serves as an important signal that the global monetary tightening phase is nearing its end. “The Fed’s rate cut indicates a more balanced policy stance. Global liquidity is likely to improve, providing room for emerging markets such as Indonesia to maintain stability without the burden of high interest rates,” Helmy said.

Furthermore, BRIDS noted that the Fed’s plan to halt its balance sheet reduction (balance sheet runoff) effective 1 December 2025 reinforces the signal of global liquidity easing. This move could accelerate capital inflows into emerging markets, including Indonesia, which continues to offer attractive asset yields and solid economic growth prospects.

“Market sentiment has started to turn positive in line with the decline in global interest rates. With controlled inflation, stable economic growth, and ample policy space, Indonesia demonstrates strong resilience compared to other countries in the region. This condition makes the Indonesian market potentially remain attractive to investors, even amid global uncertainties,” Helmy added.

With global interest rates beginning to decline, foreign investor interest in the Indonesian market has picked up, as reflected by recent inflows into equities and bonds. BRIDS data recorded a foreign net buy of IDR 545 billion during the first trading session on 30 October 2025, signaling a revival in investor confidence toward domestic market prospects.

From a technical standpoint, BRIDS Customer Engagement & Market Analyst Department Head Chory Agung Ramdhani explained that the Jakarta Composite Index (JCI) remains in a solid bullish trend, with price movements staying above both short- and medium-term averages. The index has reached the 8,180 level, approaching resistance at 8,320, while key support lies around 7,989. BRIDS assesses that the Fed’s rate cut could serve as a strong fundamental catalyst, potentially driving the JCI to break above the 8,320 resistance level, as long as support remains intact.

BRIDS believes that a more accommodative global environment will provide an additional boost for Indonesia’s financial markets toward the end of the year. As global liquidity improves and foreign funds continue to flow in, the domestic stock market has the potential to extend its upward momentum. This environment may also strengthen year-end “window dressing” sentiment, as investors typically increase buying activity during the final months of the year.