Daily Brief Macro: Indonesia: Rupiah Defence Sets the Rate and more

• Bank Indonesia held its policy rate at 5.75%, as expected, prioritising rupiah stability while macroprudential and fiscal measures support growth.
• Near-Term cuts are unlikely as Fed tightening, a strong dollar, weak portfolio inflows and higher oil prices constrain BI’s policy flexibility.
• A prolonged hold is most likely; renewed rupiah or inflation pressure could trigger a hike, while cuts require sustained external stability.

Highlights

• El Niño expected to strengthen, with nearly 100% persistence probability through February 2027

• Indonesia wildfire emissions reached 19.7 million metric tons CO2 in early September

• August 2026 was the hottest August globally, intensifying rubber supply concerns

• AI’s Next Battle Is Not Models — It Is the US$4tn+ Fee Pools Around Them, From Financial Services to Advertising and Information
• Silicon Valley Has the Scale and Cost Advantage; Wall Street Has the Licences, Balance Sheets and Relationships to Defend the Fortress
• Our Outcome: A Bifurcated Oligopoly — AI Captures Unlicensed Thinking, While Regulated Incumbents Defend Clients but Surrender Pricing Power

• The standard Central Bank response to higher inflation is to raise interest rates, but the impact on an economy will depend on a) what is causing the inflation and b) the nature of the balance sheets involved.

• Simply following the Fed risks bad outcomes for Europe and the rest of the Anglo Saxon Markets.

• Inflation at the moment is largely cost push, not demand pull, certainly not outside of the US.

• Crude oil futures rebounded strongly on Wednesday to halt the week-long losing streak, with investors unconvinced that the US and Iran are nearing a deal to end the war.
• Nov26 ICE Brent futures were 4.5% higher at  $103.69/b (2038 BST), halting a run of five straight losses, while Nov26 NYMEX WTI was at $92.73/b , up 2.4% versus Tuesday’s settle.
• The higher prices came after Tuesday’s high-level talks led by White House Middle East envoys Steve Witkoff and Jared Kushner, while Foreign Minister Abbas Araghchi headed the Iranian delegation.

• Flash PMI balances broadly increased in September, despite the intensifying energy supply shock. It has so far been shrugged off, just like the tariffs last year.
• Services balances had fallen in Q1 before the conflict began but have broadly recovered all the lost ground even without the conflict ending.
• National services balances are broadly above their medians of the past year and decade, so demand is not depressed and can’t offset excess inflation in policy trade-offs.

• As we anticipated, Iran President Masoud Pezeshkian’s speech before the U.N. General Assembly was not “benevolent” by any stretch of the imagination. Oil prices rebounded in response.                 
• The earlier oil price weakness appeared to reflect optimism regarding the “sideline” meetings between Iranian delegates and Jared Kushner and Steve Witkoff.                                       
• With respect, however, Iran has previously indicated they would not negotiate seriously with the two who Tehran characterizes as “mere real estate developers.”          

• In Depth: Why Geely’s Founder Broke With Chinese Business Tradition for His Succession When Li Shufu stepped down as chairman and executive director of Geely Automobile Holdings Ltd.
• in August, it signaled far more than a routine leadership change at one of China’s largest private carmakers.
• FINANCE & ECONOMY Hong Kong Moves to Ease Listing Rules on Major Deals, Spin-Offs 

• Remittances keep rising! Urban CPI a touch lower, core inflation higher!                           
• MPC meeting on Thursday! NBE to acquire Banque Misr’s UAE branches.
• The start of divestments finally?