Indonesia hikes, but rate tightening cycle is probably over

Bank Indonesia’s decision to hike interest rates today is largely aimed at easing pressure on the current account and stabilising the rupiah. But the lagged impact of substantial rate increases in the last few months will weigh heavily on growth in coming quarters. Barring another bout of financial market turbulence, we think today’s move is likely to be the last in the current tightening cycle.

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