Inflation Mechanisms, Expectations and Monetary Policy in Indonesia

Indonesia has been experiencing relatively low and stable inflation for the last five years. Currently, inflation has switched to a low inflation regime, thanks mainly to better anchored inflation expectations owing to the more credible inflation targeting framework (ITF) adopted in July 2005. Nevertheless, building and maintaining credibility remain the key challenge, as credibility affects the behaviour of economic agents and anchors expectations. Further, the post-Global Financial Crisis monetary policy framework in Indonesia is characterised by the flexible ITF.Full Publication: 'http://ssrn.com/abstract=2870167' Inflation Mechanisms, Expectations and Monetary Policy