Bank Indonesia to follow an FOMC hike with its own tightening: Standard Chartered

Quotes from Standard Chartered:

-Indonesia's surprise policy rate cut seems to reflect the sharp fall in inflation and relative comfort over financing the current account deficit. While we expect one more rate cut in March, the situation could reverse rapidly once the US inches closer to its first hike.

-We expect Bank Indonesia (BI) to follow an FOMC hike with its own tightening to ensure a solid yield spread over the USD.

-We expect BI to hike by 50bps in H2-2015. Stability may be the best way to think of the BI reaction function: neither too hot nor too cold. After all, no central bank wants its currency to have the world's highest or lowest carry-to-volatility ratio.