We are also aware that our policy to maintain adequate foreign exchange reserves must remain consistent by maintaining macroeconomic stability in the long run. We at Bank Indonesia are clear that maintaining a stable exchange rate and nurturing a favorable climate so as to strike a balance between internal and external balance are pre-requisites to further reduce price sensitivity to exchange rate fluctuations.
By lowering the exchange rate passthrough effects, core inflation, which is the mid to long term trend of headline inflation, will be preserved at a consistent rate approaching the inflation targets. We see that the ex-ante inflation targets up to 2010 are not impossible to achieve, namely 5 +1% in 2008, 4.5 +1% in 2009, and 4 +1% in 2010.