Indonesia moved from fixing its exchange rate (with some use of monetary instruments) through exchange rate management with a gradually more active and indirect monetary policy to formal inflation targeting from 2006, initially loose but from 2015 full inflation targeting.
| Years | Targets and attainment | Classification |
| 1974-78 | most forex transactions via central bank at narrow spreads set by central bank, but forex activity relatively unrestricted: on balance more fix than target; monetary policy relies on credit ceilings, and strongly affected by public sector budget deficit and external operations (especially those of state oil company Pertamina) | augmented exchange rate fix AERF |
| 1979-2005 | after November 1978 devaluation exchange rate is managed with reference to trade-weighted basket; more exchange rate variation (in pursuit of competitiveness) after March 1983 devaluation against larger but still undisclosed basket, band widened 1995-96 then more or less managed float from August 1997 (Asian financial crisis); financial sector reforms June 1983 with end of credit ceilings, but authorities slow to create new indirect monetary policy instruments; fiscal dominance on occasions; from early 2000s some kind of informal inflation target | loosely structured discretion LSD |
| 2006-14 | formal inflation target with 2% range from July 2005, with switch to 1-month market interest rate instead of base money as intermediate target, then to overnight interest rate as policy rate 2008; inflation targets mostly attained (misses 2008, 2013-14, partly due to administered price rises, but 2013-14 evidence that inflation expectations still anchored), but targeting is loose because large swings of inflation in both directions, and converging (though convergence not consistent); continued concern with, and periodic management of, exchange rate; macroprudential policies from 2012; fiscal dominance largely controlled | loose converging inflation targeting LCIT |
| 2015-23 | inflation targets more consistently attained; steps to improve interbank money market and hence monetary transmission mechanism (2016 new policy rate and narrower corridor, 2017 reserve requirements changes); large impact of and fiscal-monetary response to Covid-19 including some asset purchases (with temporary monetary budget financing); 2022 actual and expected inflation briefly exceed target range (Ukraine war) | full converging inflation targeting FCIT |
Selected IMF references: RED 1976 pp20, 29-30, 43; RED July 1979 p55; RED 1981 Annex II; RED 1983 pp2, 51-6; RED 1986 pp52-74, 102-3; RED 1990 p56; SR 1997 pp5-6; SI 2002 chII; SR 2005 pp21-2, 27; SR 2008 pp15, 17, 23; SR 2009 p11; SI 2011 chII; SR 2013 pp6, 14-16, 21; SR 2015 pp16-18, 30-1; SR February 2016 p5; SR December 2016 pp 16, 26; SR 2017 pp16-17; SR 2019 pp8-11, 21-2, 25; SR 2021 pp15-18; SI 2022 pp37-40, 41-3; SR 2022 pp6, 32; SR 2023 pp5, 14-16, 23, 35; SR 2024 pp7, 17, 24.
Additional source: Bank Indonesia website, http://www.bi.go.id/en/default.aspx.
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Monetary Policy Frameworks 