Monetary policy is one way of the Indonesian government to control inflation and regulate economic growth.
Bank Indonesia is an institution responsible for the implementation of monetary policy in Indonesia.
Monetary policy can be carried out through several instruments such as interest rates, foreign exchange reserves, and open market operations.
The main purpose of monetary policy is to maintain price stability and control inflation.
Interest rates are one of the most commonly used instruments in monetary policy, where interest rate increases can reduce consumer demand and suppress inflation.
Inflation in Indonesia is strongly influenced by external factors such as world oil prices and rupiah exchange rates.
Foreign Exchange Reserves are foreign currency reserves owned by Bank Indonesia and can be used to maintain the stability of the rupiah exchange rate.
Open market operations are a policy where Bank Indonesia buys or sells government securities to regulate the amount of money supply in the market.
Monetary policy can also affect economic growth, where policies that are too tight can cause slowing growth.
Besides Bank Indonesia, the Indonesian government can also use fiscal policies such as public expenditure and taxes as a way to regulate economic growth and inflation.
