Indonesia central bank cuts rate by half point to 8.25%

Special Report:Global Financial Crisis

JAKARTA, Feb. 4 (Chinese media) -- Indonesian central bank slashed its benchmark interest rate for the third straight month by a 50 basis points to 8.25 percent on Wednesday to lessen the deepening fall out of the global recession, a senior official of the bank said here.

Governor Boediono and his seven colleagues lowered the rate following the improving outlook of inflation in recent months as an effort to boost credits to spur business sectors which then is expected to increase economic growth, an analyst from Standard chartered Eric Sugandi said.

"After evaluating and monitoring all the economic and financial situation at domestic and overseas, the governor council of the bank decided to cut rate by 50 basis points to 8.25 percent today," Director of Strategic Planning of the bank Dyah N.K. Makhijani said in a statement.

The Indonesian government has struggled to boost real sector by stepping up people spending power through some measures such as lowering oil prices for the third time on January 15 since December.

Consumer prices increased 9.17 percent from a year earlier, after gaining 11.1 percent in December, and export dropped in December by 20 percent from a year earlier, the statistic bureau said.

Indonesia's inflation is predicted to slow to no more than 6 percent by August, Finance Minister Sri Mulyani Indrawati said on Monday.