Speaking at a press briefing here, Thursday, Bank Indonesia Governor Agus Martowardojo stated the central bank would still adopt a neutral monetary policy, until the middle of this year and give priority to economic stability for the sake of sustainable economic growth.
"We maintain monetary (policy) stance to control the inflation target. We also allow the rupiahs exchange rate to become flexible, but it continues to reflect economic fundamentals," he said following a quarterly meeting of the Board of Governors of Bank Indonesia from May 17 to 18.
Bank Indonesia wants to keep the inflation rate this year at 3-5 percent year-on-year. The inflation rate reached 4.17 percent year-on-year in April 2017.
Looking ahead, Bank Indonesia will stay alert for inflationary pressure as the government appears to be going ahead with a plan to adjust electricity subsidy, along with the ongoing subsidy reforms in the energy fiscal instrument, he noted.
The inflationary pressure will also likely come from the prices of volatile foods at the end of May due to high demand during the fasting month of Ramadhan and Eid al-Fitr festivities.
The central bank wants to keep the inflation from volatile foods at 4-5 percent to compensate for the high inflationary pressure from administered prices due to electricity subsidy adjustment.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2017
