English Version
I. INTRODUCTION
I. 1 Background
Recently, some central banks have applied inflation targeting framework as part of their monetary policy, after the Reserve Bank of New Zealand introduced inflation targeting in early 1990s. However, it is not been proved whether inflation rate would be under control if the policy is in place. Bank Indonesia as a central bank of Indonesia is one of a number of countries in Asia applying inflation targeting. See Table IV.1.
I. 1 Background
Recently, some central banks have applied inflation targeting framework as part of their monetary policy, after the Reserve Bank of New Zealand introduced inflation targeting in early 1990s. However, it is not been proved whether inflation rate would be under control if the policy is in place. Bank Indonesia as a central bank of Indonesia is one of a number of countries in Asia applying inflation targeting. See Table IV.1.
Previously Bank Indonesia was targeting the monetary base as a temporary framework to absorb the monetary expansion. This is not the case for some other countries, such as New Zealand, Australia, United Kingdom, or South Korea, which were use interest rate rather than the money base (Iljas, 1999). Say New Zealand, which uses inflation targeting framework, uses inflation as base target and interest rate as instrument to reach its target.
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