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Indonesia is closer than ever to becoming a trillion-dollar economy and joining a very privileged club of emerging countries which have reached this major milestone. Once it has joined the big leagues, global investors are likely to pay closer scrutiny to the country and its policy framework.

Indonesia enjoys a combination of factors of which many other countries can only dream. It has a robust growing economy but benign inflation. Its per capita income is on the rise, and thus consumption is strong. It has a low interest-rate regime which allows corporations to borrow and make investments in better production.

A huge slice of the credit for this very encouraging state of affairs must go to Bank Indonesia. Having tamed inflation, the central bank has forced down interest rates in a consistent manner for the past 12 months.

The central bank has reduced its policy rate by one percentage point since October — including last week’s surprise quarter-percentage-point cut — to 5.75 percent, the lowest it has been since it was set at 6.5 percent in July 2005.

Economists and analysts have cheered the central bank’s rate cut, saying Indonesia should favor economic growth this year rather than focus on inflation. This is exactly what Bank Indonesia is aiming to do.

With the external environment growing more uncertain by the day, the central bank’s focus on growth instead of inflation is right on the mark. With euro zone economies slowing down significantly this year, commodity prices are expected to level off. This will reduce global inflation but also lower Indonesia’s export earnings.

With lower export earnings predicted, domestic spending and investments will have to compensate. With lower interest rates, consumers will be enticed to make big-ticket purchases such as cars and homes while companies will be more willing to borrow for expansion. Combining these two factors will spur gross domestic product growth.

Strong GDP growth will also attract more foreign direct investment into the country. All in all, Bank Indonesia has done a sterling job in managing inflation and supporting domestic growth.