(RTTNews) - The Indonesian central bank is likely to start hiking interest rates in the first quarter of 2010, ING’s Singapore-based Chief Asian economist Tim Condon said in a note.

ING expects inflation to accelerate toward 7% by mid-2010 as the final leg of the boom-bust-boom in commodity prices of the last 18 months works its way through the CPI. “Poorly anchored inflation expectations make the exit strategy issue more prominent in Indonesia than, for example, in the Philippines,” Condon wrote.

Commenting on the consumer confidence data released yesterday, the firm noted that consumer confidence dropped for the second month in a row. The index loosely tracks year-on-year growth in national accounts-basis real private consumption and points to 5%-plus growth, the economist noted. He sees 5.5% growth in private consumption and 4.3% GDP growth for the third quarter.

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