Indonesian central bank cuts interest rate to 9.5 pct

The Indonesian central bank Thursday cut the benchmark interest rate by 25 basis points to 9.5 percent in response to the improving macroeconomic indicators.

The decision was taken during the meeting of Bank Indonesia's board or governors in Jakarta.

The cut was the eighth since May last year, when the so-called BI-Rate stood as high as 12.75 percent.

Bank Indonesia, the central bank, began raising interest to tame the inflation which soared after the government more than doubled fuel price rises in October 2005.

But the inflation rate ended lowly at 6.6 percent at the end of 2006, as the rupiah exchange rate also strengthened to some 9,000 against the US dollar.

Source: Xinhua