business

Indonesia Finance Minister Ready to Trade Growth for Stability

  • Government to work with Bank Indonesia to protect economy
  • Almost all economists forecast another rate hike on Wednesday

Indonesian Finance Minister Sri Mulyani Indrawati said the government is willing to accept slower economic growth as a trade-off for stability.

“All of us are ready to implement any policies needed to protect Indonesia’s economy," Indrawati told reporters on Monday in Jakarta. "So, if we have to make adjustments in the short run that will result in slightly lower growth, that’s a consequence that we will take.”

Policy makers have been forced to shift focus to stability amid a rout in the currency even as the economy is still struggling to fire up. Almost all economists predict the central bank will raise interest rates in an early policy meeting on Wednesday, which would be the second increase in two weeks.

Click to read about the new central bank governor setting the stage for the rate increase

Indonesia’s economic growth is stuck at about 5 percent, well below the 7 percent targeted by President Joko Widodo. The government would accelerate reforms to support growth and would continue working with Bank Indonesia on a coordinated policy response to the current market turmoil, Indrawati said.

“We won’t hesitate to make well-timed responses to maintain the stability of the financial sector,” she said.

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