Even though global inflationary pressures are increasing in almost all countries due to soaring global food and energy prices as well as supply chain disruptions, domestic inflation remains under control, mainly driven by supply-side inflation as reflected by inflation based on the Producer Price Index (PPI) which is higher and has been at on inflation based on the Consumer Price Index (CPI) since 2020. On the domestic side, we are still on the recovery path with strong economic performance and a series of sustainable trade balance surpluses. From the external side, global economic volatility has not subsided, bringing gloomy prospects for the global economy. As a result, many central banks have shifted to a more “hawkish” monetary policy by raising benchmark interest rates and reducing asset purchases to contain rising domestic inflation, including the Fed, which recently raised the FFR by 75bps. This phenomenon triggers a flight to quality and depreciation in developing countries. The Rupiah has depreciated to around IDR 14.800. Considering domestic and external conditions, BI's stance must still be "behind the curve" for now by maintaining the policy interest rate at 3,50% and continuing accommodative macroprudential measures to support economic growth.

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