Fighting inflation

Fighting inflation

The increase in Bank Indonesia's promissory notes (SBI)
interest rates has spawned an increase in interest rates on bank
deposits. This is a measure the government is compelled to take
for the purpose of drawing circulating money back into the
banking system, thereby repressing inflation and strengthening
the rupiah.

Nevertheless, playing the SBI card is not the ideal means for
controlling inflation, since inflation also relates to the
process of production of goods and services and to industrial
development priorities. Also not to be overlooked is that extra
money is created by the monetary authority and by private
business.

We hope good coordination can be established among the
ministers concerned so that inflation can be controlled in a more
consistent and comprehensive manner. So long as the efforts to
control inflation must rely on the monetary sector only, they
would be only temporary in nature. Given that the situation at
present is worse than it has been in the past, coordination must
be established, even though that might be difficult to achieve.

-- Bisnis Indonesia, Jakarta