Special Report: Global Financial Crisis

    JAKARTA, Dec. 4 (Xinhua) -- Indonesian central bank on Thursday reduced its benchmark interest rate by 25 basis points to 9.25 percent, to boost real sector as the economic growth predicted to slow in coming months, the bank said in a statement.

    The global financial routs which can tilt the world into a recession, in which the world's economic growth is predicted to slow to between 3.0 and 2.2 percent in 2009, has also dampened Indonesia economy in the year, a statement said.

    The Indonesian government has warned of slowing growth at gross domestic product next year, as the country slashed the growth target to the range of 5 to 5.5 percent from earlier forecast of 6percent in the year.

    The country's economy expanded 6.1 percent in the third quarter, the slowest pace in six quarters.

    "After evaluating the whole situation of development and prospect of global and domestic economy, the meeting of the central bank governor council today decided to cut rate by 25 basis points to 9.25 percent," said the statement.

    The rate cut was made after the bank raised the rate for six times this year from 8.5 percent. The bank last cut rate in December last year.

    The fall of global oil and commodities prices has reduced pressure on inflation in the country, the statement said. The country's inflation rate has slowed to 11.68 percent in November due to weakening of prices of energy and foods, the statistic agency has said.

    "By considering the development of the domestic economy, the decision to cut rate to the level of 9.25 percent, is expected to spur business sector and maintain the macroeconomic stability," the statement said.

    Analyst from Danareksa Purbaya Yudhi Sadewa said that the rate reduction is necessary to prepare a stimulus to face the slowing in the economic growth.

    "It is good, the central bank sees the future prospect of slowing growth which is needed to be supported by the financial and monetary policies," he told Xinhua.

    "The central bank would keep secure the economic stability through a coordination with the government in monitoring the development of the global, regional and domestic economies," said the statement.