Analysis of the Effect of Global Inflation on Investment Decision Making by Domestic Investors in Indonesia

Abstract

This study aims to analyze the influence of global inflation on investment decision-making by domestic investors in Indonesia. In the era of economic globalization, the dynamics of inflation that occur at the international level have a significant impact on national economic stability, including the behavior of local investors in determining investment strategies. This research uses a qualitative approach with the literature study method (library research), where data is obtained through the study of various secondary sources such as scientific journals, economic reports, monetary policy articles, and publications from international financial institutions. The results of the analysis show that global inflation affects market sentiment, exchange rates, and domestic interest rates, all of which are key considerations for domestic investors in making investment decisions. Global economic uncertainty also has an impact on investors' increasing preference for investment instruments that are considered safer, such as gold or government bonds. In addition, the government's policy reaction to global inflation, such as the adjustment of the benchmark interest rate by Bank Indonesia, has also shaped investors' expectations and the direction of their portfolio allocation. By understanding this relationship, this research is expected to contribute to the development of more adaptive economic policy strategies and provide insights for domestic investors in responding wisely to global economic dynamics.