By combining monetary policy flexibility, precise fiscal policy, and\nstrong coordination between authorities, Indonesia has the opportunity\nnot only to survive but also to strengthen its economic foundations amid\nglobal uncertainties.<\/p>\n
Jakarta (ANTARA) - Global economic uncertainty is intensifying\nalongside rising geopolitical tensions and a surge in world energy\nprices.<\/p>\n
In such a landscape, the direction of monetary policy is becoming\nincreasingly difficult to predict. The Federal Reserve\u2019s shift towards a\n\u201ctwo-way\u201d policy approach marks the end of the era of certainty that\ninterest rates would only move downwards.<\/p>\n
For Indonesia, this dynamic is not merely an external phenomenon but\na real challenge that demands a more adaptive, measured, and coordinated\npolicy response.<\/p>\n
The \u201ctwo-way\u201d approach is essentially an acknowledgement of the\nreality that economic risks are now symmetrical. Inflation could rise\nagain, but growth could also weaken suddenly. In the global context, the\nrise in oil prices is one of the main sources of this uncertainty.\nConflicts in energy-producing regions, supply chain disruptions, and\nproduction policies by OPEC+ countries have driven oil prices back into\nan upward trend.<\/p>\n
For a country like Indonesia, which still has significant dependence\non energy imports, this increase carries broad implications for\ninflation, the trade balance, and fiscal stability.<\/p>\n
In such a situation, Bank Indonesia (BI) faces a classic yet\nincreasingly complex dilemma. On one hand, BI must keep inflation within\nthe target range, usually around 2.5% (plus or minus 1%). On the other\nhand, BI must also ensure that economic growth remains stable,\nespecially amid external pressures that could weaken domestic\ndemand.<\/p>\n
The global rise in oil prices will directly increase inflationary\npressures through several channels.<\/p>\n
First, higher fuel prices will increase transportation and goods\ndistribution costs.<\/p>\n
Second, production costs in the industrial sector will also rise,\nwhich will ultimately be passed on to consumers in the form of higher\nprices.<\/p>\n
Third, if the government decides to adjust subsidised fuel prices,\nthe inflationary impact will be more direct and significant.<\/p>\n
However, the nature of inflation due to rising oil prices tends to be\ncost-push rather than demand-pull. This means inflation is not caused by\nexcess demand but by rising production costs. In such conditions, an\noverly aggressive monetary policy response\u2014for example, sharply raising\ninterest rates\u2014risks slowing economic growth without effectively\nreducing inflation. This is where the \u201ctwo-way\u201d approach becomes\ncrucial: BI needs to maintain flexibility to respond to inflation\nwithout excessively sacrificing growth.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/two-way-strategy-to-face-the-surge-in-oil-prices-1774432288", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }