Bank Indonesia and Inflation - Bank Sentral Republik Indonesia
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October 26, 2020
Bank Indonesia and Inflation

Inflation as the single objective of BI

In the mandate prescribed in the Bank Indonesia Law, the goal of Bank Indonesia focuses on achievement of a single objective, that of achieving and maintaining stability in the value of the rupiah. There are two aspects to stability in the value of the rupiah, namely stability of the currency in relation to goods and services and stability in relation to the currencies of other nations. The first aspect is reflected in the inflation rate, while the second is reflected in the rupiah exchange rate against foreign currencies…read more

Inflation Control

The purpose of Bank Indonesia monetary policy is to manage pressure on prices from aggregate demand (demand management) relative to supply side conditions. The aim of monetary policy is not to respond to inflationary spikes arising from factors representing temporary shocks that will dissipate on their own with time…read more

The Inflation Target

The inflation target is the level of inflation that must be achieved by Bank Indonesia in coordination with the Government. Under the Bank Indonesia Law, the inflation target is established by the Government. In a Memorandum of Understanding between the Government and Bank Indonesia, the inflation target is established for three year period in a Decree of the Minister of Finance (KMK). In PMK No.66/PMK.011/2012, the inflation targets established by the Government for 2013, 2014 and 2015 are 4.5%, 4.5% and 4% with ±1% deviation…read more

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