Qualitative analysis reveals interest rates significantly affect bond prices and stock valuations in Indonesia, suggesting adaptive investment strategies.
This study analyzes the effect of benchmark interest rates on bond and stock valuations in the Indonesian financial market by highlighting the dynamics in the period 2024–2025. Using a qualitative approach with secondary data from Bank Indonesia, the Financial Services Authority, and the Indonesia Stock Exchange, this study examines the theoretical and empirical relationships between changes in interest rates, bond prices, and stock valuations. The results of the analysis show that an increase in interest rates causes a decrease in bond prices and has various impacts on the stock sector. A decrease in interest rates in 2025 drives an increase in bond prices and a recovery in stock valuations, especially in sectors that are sensitive to the cost of capital. This study recommends the need for adaptive investment strategies and policy-making based on holistic macroeconomic dynamics.
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Kasnelly et al. (2025) studied this question.
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