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So, what did Bank Indonesia actually *do* to manage **inflation**? Well, they used a variety of tools, mostly centered around monetary policy. The main weapon in their arsenal is the interest rate. By adjusting the BI rate (the benchmark interest rate), BI can influence borrowing costs in the economy. Think about it this way: when BI raises interest rates, it becomes more expensive for businesses and consumers to borrow money. This, in turn, can slow down spending and cool off **inflation**. This is called monetary tightening. However, BI has to be careful. Raising rates too aggressively can hurt economic growth. Conversely, when **inflation** is low, or the economy is slowing down, BI might *lower* interest rates to stimulate borrowing and spending, this is monetary easing.
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