Bank Indonesia (BI) kept its reference rate unchanged today at 6.5%. The no-change outcome was not a surprise but we suspect that the decision was finely-balanced. Inflation is picking up fast while the upswing should stay strong. For now, BI is focused on trying to curb capital inflows. But the danger with this approach is that the central bank becomes complacent about the need to raise interest rates. We expect BI to change tack soon and forecast that rates will start to move up in January or February.