Inflation to fall in Indonesia despite currency weakness

Bank Indonesia meets this week with the rupiah having so far come through the latest period of EM turmoil in reasonable shape. As such, it is under little pressure to follow other EM central banks in hiking rates. What’s more, we doubt that earlier currency weakness will do much to push up inflation in the months ahead. In fact, inflation should drop back sharply from the middle of this year, potentially clearing the way for rate cuts.