* Benchmark rate cut 25 bps to 7.25 pct
* Policy had been on hold since February
* C.bank decision comes hours after Jakarta blasts
By Hidayat Setiaji and Gayatri Suroyo
JAKARTA, Jan 14 Indonesia's central bank, which
resisted cutting its benchmark interest rate for months, did so
on Thursday in a bid to lift an economy growing at its slowest
rate in six years.
The benchmark policy rate was lowered by 25 basis
points to 7.25 percent, while the overnight deposit facility
rate and lending facility rate were also cut by the same amount
to 5.25 percent and 7.75 percent respectively.
The last time the benchmark rate was changed was in
February, when it was reduced by 25 basis points to 7.50
The decision was announced hours after explosions and
gunfire in central Jakarta less than two kilometres from where
Bank Indonesia (BI) was holding its first policy meeting of
Ten of 16 analysts in a Reuters poll had predicted a rate
cut on Thursday.
Some analysts expect Thursday's cut will be the first in an
easing cycle. BI said it will assess the need for further
monetary policy loosening in future.
The rupiah, whose stability has been a prime concern for BI,
weakened after the Jakarta attacks and strengthened slightly
after the rate cut announcement.
Economists welcomed the rate cut.
The move "should provide a long-overdue boost to the
struggling economy," said Daniel Martin at Capital Economics in
At policy meetings since October, Bank Indonesia (BI) has
said it saw widening room to loosen monetary policy, but it had
refrained from cutting its benchmark rate ahead of the Federal
Reserve's first U.S. rate hike in nearly a decade. BI was
concerned lower domestic rates could spark capital outflows and
weaken the fragile rupiah.
In 2015, the rupiah was Asia's second-worst performing
currency, falling by 10 percent against the dollar and touching
But in the fourth quarter, it was best performing one with a
6.2 percent jump. It has not been as badly hit as many other
currencies by the early 2016 emerging market rout.
The easing of annual inflation to a six-year low of 3.35
percent in December has provided room for the rate cut.
Growth in Southeast Asia's largest economy is expected at
the bottom of BI's target range of 4.7-5.1 percent in 2015,
making it the slowest since 2009.
The central bank has said 2016 growth is expected at 5.2-5.6
(Reporting by Hidayat Setiaji and Gayatri Suroyo; Editing by