<![CDATA[Research on monetary policy and the Islamic banking industry is urgent to ensure financial stability, promote sustainable growth, and address ethical finance demands. It helps policymakers adapt strategies, enhance resilience, and align financial practices with evolving global economic challenges. This study was conducted to determine the effect of the rupiah exchange rate, bi rate and money supply on inflation and profitability of Islamic banking in Indonesia. The population in this study is all Islamic Commercial Bank (BUS) financial report data that has been published by the Financial Services Authority (OJK) in Sharia Banking Statistics (SPS) and all Bank Indonesia (BI) data in Indonesian economic and financeal statistics. The sample in this study is based on time series data (annual) 2005-2023. The method in this study uses a quantitative approach with a path analysis model. Based on the individual test, the BI rate has a significant effect on inflation while the rupiah exchange rate and money supply do not have a significant effect on inflation. The rupiah exchange rate, BI rate, money supply and inflation have no significant effect on Islamic banking ROA. Simultaneously the rupiah exchange rate, BI rate and money supply have a significant effect on inflation while the rupiah exchange rate, BI rate, money supply and inflation have no significant effect on Islamic banking ROA. Policymakers should enhance monetary stability to protect Islamic banks from inflationary shocks while promoting risk-sharing contracts to sustain profitability. Regulators could encourage product innovation and resilience frameworks. Future research may explore digital finance integration, cross-country comparisons, and long-term inflation impacts on Islamic banking efficiency in Indonesia’s evolving economy]]>
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