As an authority of monetary, we already knew that, BI has a single purpose, that is inflation. Why inflation?, I’ll tell you the definition of inflation, Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. It means, the price level of goods today won’t same as the price level of goods in the future. Consequently, inflation reflects a reduction in the purchasing power per unit of money.

As a Developing country, Indonesia still has a higher level of inflation, it hampers the growth of economy because higher price decreasing the power of production and consumption. Thus, Indonesia has many islands and unfortunately still hasn’t good infrastructure (ie harbor), which makes the level of inflation in east Indonesia higher than the level of inflation in java (ie, the price of cement in java is Rp 50.000, but in papua is Rp. 1.000.000). It means that disruptions on the supply of goods have been instrumental in driving up prices rather than increasing domestic demand.

As a result, inflation is not entirely a monetary phenomenon in Indonesia but the real sector itself contributes the level of inflation, meaning that BI can’t rely solely on interest rate adjustments to manage price levels (Demand Side). Thus, the govt should improve our infrastructure through govt policy.