Indonesian central bank cuts interest rate

Bank IndonesiaJakarta - Indonesia's central bank on Thursday lowered its key interest rate by 25 basis points to 9.25 per cent, an unexpected move aimed at helping shield its economy from the global financial crisis.

It was the first cut since Bank Indonesia lowered its key interest rate in December.

"The decision to cut the rate was taken after evaluating financial and economic prospects, both in the domestic and global market," the central bank said in a statement.

The bank said it hoped the rate cut would help maintain domestic economic stability amid the global economic meltdown.

"The impact of the financial crisis on the global economy is getting real, and is also beginning to influence the national economy," it said.

Indonesia's finance minister Sri Mulyani Indrawati said Tuesday the country's economy may grow between 5 per cent and 5.5 per cent in 2009, but warned that in the worst case scenario, it growth could slow to 4.5 per cent next year.

The country's annual economic growth in the third quarter of 2008 expanded by 6.1 per cent, down from a 6.4-per-cent-growth seen in the previous three months, according to the Central Statistics Agency.

Indonesia's annual inflation eased slightly in November to 11.68 per cent from 11.77 per cent in October.

The central bank said the 2009 inflation target of 6.5 per cent to 7.5 per cent was expected to be achieved, and there was even a possibility it could approach the lower limit. (dpa)

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