Bank Indonesia: MSCI threat puts rate hike in play

Bank Indonesia is likely to leave rates on hold at its meeting next week, but today’s sharp market sell-off following MSCI’s threat to downgrade Indonesia to standalone status raises the prospect of a hike if the rupiah comes under renewed pressure. Meanwhile, the central bank in the Philippines is almost certain to raise rates by 25bp amid surging inflation and a record-low peso. In contrast, the Bank of Korea looks set to keep rates on hold after two consecutive hikes, with inflationary pressures less acute and likely to ease early next year.