As we look at it, the global situation is still highly vulnerable and so is our macro assumption.Jakarta (ANTARA) - Bank Indonesia (BI) has reminded that a global stagflation risk will still cast a shadow on the Indonesian economy despite several international rating agencies' high confidence in the national economy.
S&P Global Ratings recently revised Indonesia's economic outlook to stable from negative.
"As we look at it, the global situation is still highly vulnerable and so is our macro assumption," BI Senior Deputy Governor Destry Damayanti stated at a working meeting with the House of Representatives (DPR) Budget Committee in Jakarta on Monday.
Darmayanti remarked that BI will focus more on containing the inflation that will likely exceed the target of two to four percent for this year.
However, she believes that inflation will return to the target of two to four percent in 2023.
To that end, BI will always stay alert for the inflationary pressure, especially from volatile price inflation and impact on inflation expectations, she noted.
"In this regard, we will use all policies we have, including adjusting the interest rate if core inflation shows signs of increasing," she remarked.
She said the inflation is currently below 3.6 percent. BI will continue to coordinate with the government, through the central and regional inflation controlling teams, to control inflation.
In addition, BI will focus on controlling the rupiah's exchange rate that has currently come under high pressure, she noted.
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Although the rupiah currently weakened against the dollar, pressures on the rupiah will ease in 2023 owing to domestic fundamentals, relatively small current account deficit in 2022 and 2023, strong foreign exchange reserves, and good prospects for the national economy, she stated.
Looking ahead, BI will continue to strengthen the policy of stabilizing the rupiah's exchange rate in accordance with the market mechanism and fundamental of the exchange rate as part of the efforts to contain high inflation and stabilize the macro economy.
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Translator: Agatha Olivia V, Suharto
Editor: Rahmad Nasution
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