Bank Indonesia Likely to Deliver One More Rate Hike in 4Q

Dow Jones09-25

0340 GMT - Bank Indonesia could deliver one additional 25 bps rate hike in 4Q, bringing the policy rate to 6.00%, with the timing likely driven by rupiah stability and financial-market conditions, RHB economist Wong Xian Yong says in a note. BI could remain patient in the near term, using forex intervention, liquidity measures and other policy tools to manage temporary currency pressure, he says. The Fed's rate hike could keep pressure on the rupiah, but improved foreign portfolio inflows and higher reserves give BI room to delay a rate move. The November MSCI review remains a key risk to capital flows and the rupiah. A rate hike is therefore likely to be used primarily to support currency and financial stability rather than in response to inflation alone, he adds.

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