Remarks at Bank Indonesia

The representatives at this conference from inflation targeting central banks—including Brazil, Canada, Chile, Czech Republic, New Zealand, Korea, Thailand, and the United Kingdom—have provided us with a useful overview of how inflation targeting works in practice. These experiences will be very important as other countries, including Indonesia, consider inflation targeting. We have also had some contrasting perspectives from Malaysia and Singapore where the focus has been more on the exchange rate. I want to discuss three issues in this summary. The first is a semantic issue, relating to the alternative to inflation targeting; I think that this issue has at times confused the policy debate about whether inflation targeting is a good idea or not. The second issue is about the importance of a political commitment to inflation targeting. And the third is about the role of the exchange rate.