Is Bank Indonesia’s independence under threat?

Proposed changes to Bank Indonesia’s mandate, which include a shift to focus more on growth and unemployment, could lead to major changes in how the central bank operates. However, given the country’s high level of foreign currency debt, policymakers would be taking big risks if financial markets thought they were prioritising growth over the stability of the rupiah. In practice, therefore, we doubt the proposed changes would make much difference to how monetary policy is set.