Synergy And Stability: BI And Government Collaborate Amid Monetary Policy Hold

Jakarta - The monetary policy announcement from Bank Indonesia extended beyond interest rates, placing significant emphasis on enhanced policy synergy with the Government of Indonesia. This collaborative approach is deemed essential to navigate the current economic challenges comprehensively, addressing both demand-side pressures through monetary tools and supply-side issues through fiscal and regulatory measures.

A key area of joint focus is controlling volatile food inflation. BI supports the government's efforts in ensuring the smooth supply and distribution of staple food commodities. Stable food prices are critical for managing inflation expectations and protecting the purchasing power of lower-income households, which complements BI's monetary stance.

Furthermore, synergy is being accelerated in the structural reform agenda. This includes efforts to deepen the domestic foreign exchange market, promote the use of local currency in international transactions (LCT), and encourage the repatriation of export earnings. These measures aim to reduce structural dependence on the US dollar and bolster external resilience.

On the monetary front, BI assures that its pro-stability policy will continue to be supported by an adequate supply of liquidity in the banking system. The central bank is committed to fine-tuning its monetary operations to ensure the smooth functioning of financial markets and the payment system.

This joint effort between the monetary and fiscal authorities sends a powerful, coordinated signal to the markets. It demonstrates a whole-of-government commitment to maintaining economic stability, which is fundamental for sustaining investor confidence during periods of global uncertainty.

BI Governor Perry Warjiyo stressed that such synergy maximizes policy effectiveness. While BI manages aggregate demand and the exchange rate, the government can work on improving the supply side, enhancing competitiveness, and implementing social safety nets to cushion the impact of global shocks.

The collaborative framework is also forward-looking, aiming to strengthen Indonesia's economic fundamentals for the long term. This includes ongoing digitalization of the financial sector and the development of green financing to support sustainable economic transformation.

Ultimately, the policy hold and reinforced collaboration underscore a mature and integrated economic management approach. By working in concert, Bank Indonesia and the government aim to secure not only immediate stability but also a foundation for resilient, high-quality economic growth in the future.

Tag: Domestic Stability Food Inflation Government Collaboration Macroeconomic Coordination Policy Synergy Structural Reform Supply-side Policy