Bank Indonesia: Normalization Of Developed Country Policy, Needs Communication, Planning, And Calibration

JAKARTA - Bank Indonesia Governor Perry Warjiyo emphasized that the policy normalization steps taken by developed countries must be through good communication, planning and calibration so as not to pose a risk to the recovery of developing countries.

"In developed countries that are starting to normalize, they must prioritize the words well calibrated, well planned and well communicated," he said in the Indonesian G20 Presidential Agenda, quoted by Antara, Saturday, February 19.

Perry gave an example, the policy normalization plan that needs to be calibrated, planned and communicated properly is the increase in the Fed's interest rate which is predicted by Bank Indonesia for four times.

The monetary policy normalization plan needs to be calibrated, planned and communicated properly so that the market can prepare steps to anticipate inherent risks.

Perry emphasized that it is important so that the impact of the policy normalization plan can be taken into account by markets and developing countries in making monetary policies of each country.

In addition, from the perspective of developing countries, Perry said that it is necessary to strengthen its fiscal resilience to withstand the global spillover impact of the normalization plan of developed countries.

He said that Indonesia had implemented several steps to strengthen external resilience, namely, first, to have a healthy macro economy, both fiscal and monetary financial stability.

Then also, monetary policy in Indonesia is pre-emptive, forward looking and extraordinary and supports economic growth with fiscal coordination.

“How do we do it? Indonesia calibrates three monetary policy instruments, namely exchange rate stability, liquidity and interest rate policy," he said.

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