Bank Indonesia unexpectedly cuts interest rate to bolster growth

Jakarta

INDONESIA'S central bank unexpectedly cut its main interest rate for the first time in three years, joining global counterparts in easing monetary policy to support South-east Asia's biggest economy as inflation cools.

Bank Indonesia governor Agus Martowardojo and his board lowered the reference rate to 7.5 per cent from 7.75 per cent, the authority said on Tuesday. All 20 economists surveyed by Bloomberg News had predicted no change. The central bank also reduced the rate it pays lenders on overnight deposits, known as the Fasbi, by 25 basis points to 5.5 per cent.