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View all search resultsThousands of miles apart: Two governors, one North Star problem
From Jackson Hole to Jakarta, the Fed's Kevin Warsh and BI's Destry Damayanti face twin battles over the most fragile asset in central banking: credibility.
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Newly appointed Bank Indonesia (BI) Governor Destry Damayanti gestures during the 4th plenary session of the House of Representatives on Sept. 1, 2026, flanked by her new senior deputy governor Aida S. Budiman (left) and deputy governor Solikin M. Juhro at the Senayan Legislative Complex in Central Jakarta. (Antara/Rizka Khaerunnisa)
T
wo central bankers, an ocean apart, faced strikingly similar tests this year under very different skies. On Aug. 29, Kevin Warsh delivered his debut address as United States Federal Reserve chair at the Jackson Hole symposium. Three days earlier in Jakarta, the House of Representatives confirmed Destry Damayanti as the first woman to lead Bank Indonesia (BI). Read together, these two moments captured the evolving pressures on central banking in 2026 far better than either could have alone.
Writing in the Financial Times, Mohamed El-Erian highlighted an angle of Warsh’s speech worth dwelling on. Warsh reaffirmed the Fed’s dual mandate of employment and price stability, managed through the blunt tool of the policy rate, with an unmistakably hawkish lean, recommitting to the personal consumption expenditures index as the Fed’s baseline metric.
He also warned that forward guidance had outlived its usefulness, cautioning against a "hall of mirrors" where the central bank and financial markets merely bounced each other's signals back and forth.
Yet El-Erian’s deeper critique was that headlines fixated on that quip while overlooking Warsh’s more ambitious objective: steering a divided policy committee toward a structural, long-run framework centered on artificial intelligence as an emerging factor of production rather than remaining captive to meeting-by-meeting rate calls.
Set that dynamic against BI. Over several years, I have questioned why Indonesia’s headline inflation appeared unusually benign relative to regional peers.
In 2021, administered energy prices frozen since 2015 suppressed the consumer price index even as global commodity prices surged. By 2022 and 2023, structural headwinds — demographic shifts, deglobalization and climate volatility — began closing in.
Meanwhile, the pandemic-era "burden sharing" arrangement between the Finance Ministry and the central bank — sovereign bond purchases justifiable only in an acute crisis — quietly morphed into an enduring habit rather than a sunsetting emergency measure.
