During its worst point in early 1998 Indonesia’s inflation rate reached almost 13% in one particular month alone, a dramatic rise from the 1997 level of 10.3% for the whole year. In response, we adopted a tight monetary policy, and work in a very tight discipline to adhere to the preset targets of monetary aggregates on a day-today basis.
At the same time, the price pressure remained strong due to consequences of the invasion, such as the destruction of enterprises and infrastructure and disruption of production and supply chains. Moreover, business costs continued to grow on the back of the energy sector destructions. Despite a stabilization, inflation expectations remained high.