Indonesia central bank gains credibility decades after crisis

Jakarta

WHEN inflation pressures began surging just as he took the helm of Indonesia's central bank, Agus Martowardojo didn't hesitate to plant his flag on the side of price stability.

The newly installed Bank Indonesia governor proceeded to raise interest rates five times in the second half of 2013 - each time surprising economists accustomed to less-hawkish leadership. A former loan officer who rose to head the nation's largest bank, Mr Martowardojo demonstrated he was ready to sacrifice growth to shore up the rupiah and quell inflation.

Three years on, it's becoming clear that he has championed a deeper set of changes designed to strengthen the effectiveness and credibility of Bank Indonesia, an institution that had presided over a currency collapse in the 1990s. That bodes well for South-east Asia's…