Who will follow Indonesia higher?

The Philippines, India and Korea are all likely to follow Bank Indonesia by hiking interest rates over the next couple of months. But unlike Indonesia, these three are set to tighten policy from a position of relative strength. In the event that the growth outlook took a turn for the worse, they would put tightening on hold. In contrast, the priority for policymakers in Indonesia will remain safeguarding financial stability. Interest rates are therefore likely to continue to rise for as long as the rupiah remains under downward pressure, even if this causes a sharp slowdown in growth.