The Impact of Monetary Policy Transmission Mechanism on Price Stability in Indonesia: A Multiple Linear Regression Approach for the Period 2015–2024
Keywords:
Inflation, Monetary Policy, Interest Rate, Money Supply (M2)Abstract
This study aims to analyze the effect of policy interest rates and money supply (M2) growth on inflation in Indonesia during the 2015–2023 period. This study uses a quantitative method with a multiple linear regression approach based on secondary data from Bank Indonesia and the Central Bureau of Statistics. The results show that both policy interest rates and M2 growth have a negative effect on inflation, but this effect is not significant either partially or simultaneously. This finding indicates that inflation movements during the study period are more influenced by external factors such as global commodity prices, government fiscal policy, and the dynamics of post-pandemic economic recovery. The conclusion of this study is that monetary policy has not been fully effective as a single instrument in maintaining price stability. The implications of this study indicate the need for more targeted coordination of monetary and fiscal policies, particularly in strengthening food supply stabilization, distribution efficiency, and strengthening the domestic production sector.
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