Ahmad Erani Yustika_abstract_1432010


Ahmad Erani Yustika
Fakultas Ekonomi Universitas Brawijaya
Jl. MT.Haryono No.165 Malang, 65145

Eka Heni Sulistiani
The Economic Reform Institute (ECORIST)

Korespondensi dengan Penulis:
Ahmad Erani Yustika: Telp. +62 341 418 871
E-mail: erani@fe.unibraw.ac.id; erani73@yahoo.com

Besides fiscal policy, monetary policy was the main instrument in designing economic policy. of course, the role of central bank, in this case Bank Indonesia, was so vital in formulating monetary policy. Since some years ago, Bank Indonesia had decided that the target of monetary policy was only to keep inflation, known inflation targeting. This policy had a strong point because BI could focus in keeping economic stability. However, the weakness of this policy was its tendency not to be adaptive with national economic situation, such as poverty and unemployment problems. Anyway, BI independence also gave a good benefit because BI could formulate a policy as needed without any intervention from other interest, like politic. However, in the implementation, the independence should not come into management, including monetary policy management. This was the important thing in giving a chance for BSBI (Supervision Board of Bank Indonesia) to watch BI, including monetary policy, without disturbing BI independence in formulating a policy. Thus, the purpose of independence still became a domain owned by BI, but the implementation of the policy could be the object of watching.

Key words: monetary policy, inflation targeting, BI independence

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