Perilous ECB Balancing Act

J. Soedradjad Djiwandono
J. Soedradjad Djiwandono, Emeritus Professor of Economics, Faculty of Economics and Business, Universitas Indonesia, and Adjunct Professor of International Economics, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

Final Note 

I have been asked by friends aware of my background, as well as following my writings on monetary and central banking issues, to respond to their concerns regarding Bank Indonesia policy holding interest rates at a constant level, while other central banks were pumping up theirs.

Read: Disapointment in Central Bank Policy is Baseless

 I responded to their queries as honestly as I could, offering a standard answer for lack of knowledge of actual financial data and information. My response was based on my faith in the expertise and trust in the steady hands of Governor Perry Warjio, assuring all my correspondents that we should not be worried, as I am confident that he knows what he is doing. While I am aware that this stance cannot endure long, if global developments persist along their current course, my appraisal is that the Governor and his team will take appropriate action at the precise moment that they should. Unquestionably, Bank Indonesia cannot stand alone: Finance must work hard to support Bank Indonesia in guarding the national reserves on the one hand while raising the tax ratio on the other. It remains for us to wish them good luck and hope for the best. (J. Soedradjad Djiwandono)