REPUBLIKA.CO.ID, KUPANG -- Senior Deputy Governor of Indonesia's central bank, Mirza Adiyaswara, said that inflation has been on a downward trend till the third quarter of this year.
He added that it was recorded at 4.53 percent, which is lower than the 8.4 percent recorded in the same period last year.
"This means the tight monetary policy, strengthened by policy coordination with the government, has been able to curb further impacts of the June 2013 fuel price hike," he stated here on Saturday (29/11).
The Bank Indonesia (BI) official noted that the low inflationary pressure and surplus in payment account had affected the foreign exchange market positively.
"Depreciating inflationary pressure and exchange rate fluctuations in 2014 have been lower than those in 2013. They were accompanied by an improving micro-structure of the foreign exchange market as reflected in the volume of transactions in the inter-bank spot market, which rose from US$500 million to US$1.5 billion per day," he affirmed.
In view of that, it was not too much to say that the steps and policies taken by the government and BI so far have been able to restore stability in macroeconomic conditions.
"The achievement must be jointly maintained and preserved against short-term pragmatic interests," he cautioned.
Moreover, Adiyaswara pointed out that the government's recent strategic decision to divert oil subsidy to infrastructure, social, and educational development programs would, indeed, increase short-term inflationary pressures, but he explained that the reform was needed to create fiscal room to support the pace of development.
In line with this, BI has fully supported the fuel price hike policy, expecting people to be able to enjoy its benefits in the years ahead, he remarked.
"Following the government's move, Bank Indonesia raised BI Rate to 7.75 percent early last week. The step was taken to reaffirm that we are implementing a tight-bias monetary policy as a preemptive measure to mitigate the impact of the fuel price hike on inflation in the future," he elaborated.
"We wish to assure that the inflationary pressure would only be temporary, while the rate of inflation and its future expectation would remain controlled at around 4, plus/minus one, percent," he affirmed.
BI believes that with inflation and its expectations controlled at a low rate, real savings and public's purchasing power would not be affected and the foundation of economic growth and poverty alleviation will be made stronger.
"The monetary policy we have undertaken is also aimed at assuring that current account deficit in the next three years will remain under control at around 2.5 to 3.0 percent of the GDP and will not swell. Controlled current account deficit is very important to assure strong and balanced national economic growth and continued creation of jobs," Adiyaswara stated.
Ikuti Whatsapp Channel Republika