Indonesia passes bill expanding central bank role to spur growth - Reuters

Indonesia’s parliament has approved a landmark bill that broadens the central bank’s mandate, officially shifting its focus beyond price stability to include active support for economic growth. The new law empowers Bank Indonesia to coordinate more directly with the government on fiscal and monetary policy, and it introduces a formal framework for the bank to purchase government bonds in the secondary market under certain conditions. This marks a significant structural change, as the central bank’s primary objective had long been anchored solely on inflation control.

For markets, the development signals a more interventionist policy posture in Southeast Asia’s largest economy. Investors will likely watch how this new flexibility is used, particularly regarding bond market stability and the rupiah’s exchange rate. The key tension lies in balancing growth support with currency and inflation credibility. Analysts will monitor the first few policy decisions under the new framework to gauge whether the bank prioritizes stimulus or maintains its cautious stance. The bill’s passage is a clear signal that Jakarta is prioritizing economic acceleration, but the long-term effect on financial stability remains an open question.