(Bloomberg) -- Indonesia’s central bank will likely postpone monetary easing to later this year, if not early 2025, as it waits out uncertainty around the Federal Reserve’s rate path and the continued fighting in the Middle East.

Twenty of 21 economists polled by Bloomberg expect Bank Indonesia to delay rate cuts, with most expecting an easing in the fourth quarter and a few as late as the January-March period. In other words, the central bank is more likely to stand pat on Wednesday, according to 30 of 41 analysts in a separate survey, with the remainder penciling in the possibility of a quarter-point hike in the BI-Rate to 6.25%.

The survey results underline how the bar for rate cuts is getting higher across emerging Asia as a resurgent dollar and risk aversion wreak havoc on the region’s currencies. The pressure is even more acute for BI, whose prime mandate is to ensure currency stability and is particularly sensitive to swings in foreign investor sentiment.

“There is considerable uncertainty in the pipeline regarding the direction of global interest rates, particularly for the Fed,” said Radhika Rao, an economist at DBS Group Holdings Ltd. “The resultant volatility in the US dollar and rates is likely to swing the Indonesian markets further, necessitating the central bank to maintain a favorable differential with the US Treasuries and delay the start of the easing cycle to late in the year.”

The rupiah is seeing some relief on Wednesday, strengthening as much as 0.4% and extending gains for a third straight day.

With the currency near a pandemic-era low and foreign investors pulling $2.1 billion from the nation’s bond market this year, “the tone of the meeting will almost undoubtedly be on the hawkish side,” according to economists at Morgan Stanley.

BI Governor Perry Warjiyo appeared to dial back his previously dovish tone in a statement on Friday, saying the central bank will ensure exchange rate stability with market interventions and “other necessary measures” as it stepped up its dollar selling in spot and derivatives markets to prop up the currency.

It was the latest in a flurry of responses from Southeast Asia’s biggest economy as it took an all-out approach to buttress the rupiah. The central bank jacked up premiums on its so-called rupiah securities, or SRBI — a monetary instrument it uses in tandem with policy rate to lure inflows. The government also ordered its state-owned companies to hold back on large dollar purchases and imports of consumer goods.

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“BI will have breathing room to conduct various interventionist policies to stabilize the rupiah and only exercise a rate hike as the last resort,” said Lionel Priyadi, macro strategist at PT Mega Capital Sekuritas in Jakarta. Indonesia’s foreign exchange reserves stood at $140 billion in end-March, much higher than their level in October when the central bank last hiked.

Continued FX intervention to support the rupiah may, however, be unsustainable and drain liquidity from the financial system, according to PT Bahana Sekuritas Satria Sambijantoro, who expects a 25-basis points hike on Wednesday and another in May.

A rate hike, should it materialize, would lift the benchmark to the highest level since it was introduced in 2016.

Such a move, though, could be viewed by investors as a “panic hike,” said Euben Paracuelles, a Nomura Holdings Inc. economist in Singapore. “It could be counterproductive given the likely negative reaction in bond markets which in turn could induce outflows and undermine BI’s FX stability goal.”

--With assistance from Matthew Burgess.

(Updates with rupiah move in fifth paragraph)

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