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