Bank Indonesia has surprised on the upside with its September rate decision, announcing a quarter-percentage-point increase to the BI Rate, taking the reference rate to 7.25%  in a move intended to shore up the slumping rupiah and curb price pressures.

It increased the key Fasbi money market rate by 25 basis points to 5.50% ahead of a U.S. Federal Reserve meeting due next week, which most analysts are expecting will provide more detail on the Fed’s plan to reduce monthly quantitative-easing asset purchases – the so-called taper that has hit emerging markets hard as portfolio investors trade risk for the prospect of improved returns on developed-market assets, shifting large amounts of capital out of markets such as Indonesia and India in recent weeks.

The outflows have pushed the rupiah down 16% against the U.S. dollar so far this year amid a selloff in local stocks and bonds. The rate move is the second in under a month after BI in mid-August held an unscheduled policy meeting as the rupiah took a turn for the worse, adding 25 basis points to borrowing costs after previously keeping the reference rate steady at its regular monthly meeting earlier in August.

Seven of nine regional economists surveyed by Dow Jones had forecast BI to keep rates steady this month ahead of an expected softening inflation, which could see the consumer price index, the main inflation gauge, contract in October, according to government estimates.

Economists in the minority camp had forecast the monetary authority to front-load rate hikes this month in an effort to secure a smooth passthrough of monetary policy heading towards the end of the year, as well as averting inflationary pressures caused by higher prices for imported goods due to the weak rupiah.

BCA economist David Sumual was quoted by Dow Jones as saying that industries with high import content may adjust prices this month or next, passing on the increases to consumers and the broader economy. He forecast year-end inflation to hit 9.4% on year, compared with a previous prediction of 8.3%. Bank Indonesia is expecting on-year inflation of nearly 10%, far higher than its 3.5%-5.5% range forecast at the start of the year. The CPI rose 1.12% in August from a month earlier, easing from July’s on-month rate of 3.29%.