(Bloomberg) -- Indonesia’s central bank will probably leave its benchmark interest rate unchanged after a surprise hike last month helped arrest the slide of the local currency.

All 38 economists in a Bloomberg survey expect Bank Indonesia to hold its benchmark BI-Rate at 6.25% on Wednesday. The authority last month moved by a quarter point to help guide the rupiah closer to the key level of 16,000 against the dollar.

With the rupiah, which has fallen about 3.9% so far this year, paring its April losses, there’s less pressure on the central bank to do more, given inflation is trending within the 1.5%-3.5% target band. Governor Perry Warjiyo also signaled standing pat on rate, citing how the pressure on the currency has receded faster than anticipated. 

Here’s what to watch out for in the BI rate briefing starting 2 p.m. local time:

Peak Rate

Warjiyo has pledged to continue utilizing other monetary tools to stabilize the rupiah, which is the key mandate of the central bank. That raises the question of whether the rate at 6.25% is already at its peak, and if so when the pivot to easing would be.

“External conditions have turned more benign since BI’s rate hike in April,” said Krystal Tan, an economist at Australia & New Zealand Banking Group, adding that BI’s scope to pivot will hinge on the timing and pace of the Federal Reserve’s easing.

PT Bahana Sekuritas economist Satria Sambijantoro cautioned against declaring victory too soon, citing risks to emerging market currencies from fresh US tariffs on Chinese imports. 

“We are near the end, but not the peak just yet,” he said. Sambijantoro, the only analyst to correctly predict Bank Indonesia’s last two shock rate hikes, sees the BI-Rate going up to 6.5% either this quarter or in the next.

Risks Ahead

With Bank Indonesia’s surprise rate hike last month making Indonesia’s debt more attractive to investors, global money managers have ploughed more than $900 million into the nation’s bond market in May, putting the nation on track for its first monthly net inflows this year.

However, any hawkish signal from the Fed on rates could quickly turn the tide for the rupiah, which has gained about 1.5% this month to become Asia’s third best performer. Moreover, Indonesia’s external balance has deteriorated with the current account falling into a deeper deficit and foreign exchange reserves dwindling by over $10 billion so far this year, underscoring vulnerabilities to the currency.

There’s still a chance for Warjiyo to lift the key rate by another 25 basis points should the rupiah depreciate further, Tan said. “Even by 50 basis points, if the weakness is particularly profound.”

--With assistance from Cynthia Li, Matthew Burgess and Tomoko Sato.

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