Indonesian central bank cuts rate to 7.5 pct

Indonesian central bank on Tuesday unexpectedly lowered its benchmark interest rate by 25 basis points to 7.5 percent to accelerate economic growth, Agus Martowardojo, governor of the bank said.

Indonesia's economic growth slowed to 5.02 percent last year, the lowest in five years, according to the national statistic bureau.

The central bank governor said that inflation in 2015 will be at the lower end of the 3 to 5 percent, compared with 8.36 percent last year.

"This decision is based on the confidence that inflation will remain low which is expected at the bottom of the target of 3 to 5 percents (this year)," he told a press conference at the headquarters of the bank.

The bank also decided to keep the lending facility rate steady at 8 percent and lower the deposit facility rate by 25 basis points to 5.5 percent, according to Agus.

President Widodo, who took office on Oct. 20 last year, has targeted 5.7 percent economic growth this year and expected an annual average of more than 7 percent growth during his five-year term.

"That means the country has to pursue 8 percent or more GDP in years to come," Economic Chief Minister Sofyan Djalil said Monday.

The central bank rose the rate by 25 basis point to 7.75 percent shortly after President Widodo's decision to cut subsidized-fuel prices on Nov. 18, which triggered inflation in the country.

Indonesian inflation in January slowed to 6.96 percent compared with 8.35 percent in December. Endi