Bank Indonesia’s Governor Perry Warjiyo has a challenging task ahead: finding the delicate equilibrium between fostering currency stability and promoting economic growth, all while considering potential interest rate cuts in 2026.
In a recent address at the central bank’s annual meeting in Jakarta, Warjiyo emphasized the importance of monetary policy’s dual focus on stability and growth, especially in the face of ongoing global uncertainty. He highlighted that stability is the cornerstone for any nation’s pursuit of high and sustainable economic growth.
But here’s where it gets controversial: how does one achieve this balance, especially when interest rate cuts are on the table?
Lowering interest rates can stimulate economic growth by encouraging borrowing and spending, but it can also lead to currency depreciation, which may undermine stability.
And this is the part most people miss: the art of central banking lies in making these nuanced decisions, considering the unique context of each country and its economy.
So, what do you think? Is Bank Indonesia’s approach the right one? Should they prioritize stability or growth, or is there a way to achieve both simultaneously? We’d love to hear your thoughts in the comments below!