RTTNews - Friday, Indonesia's central bank lowered its key interest rate for the eighth consecutive month to a new low.

The Bank Indonesia cut its benchmark rate by 25 basis points to an all-time low of 6.75%. The central bank's rate cut decision was in line with economists' expectations.

In June, the central bank had slashed the rate by a quarter point to 7%. Including the latest cut, the central bank made a total reduction of 275 basis points since December last year.

Indonesia is continuing its monetary easing at a time when most of the other central banks stopped reducing their rates. In an accompanying statement, the central bank hinted that the rate-cut cycle would reach its end soon.

Among recent economic indicators for Indonesia, consumer confidence indicator improved in May and inflation eased sharply to 3.65% in June from 6.04% in May. Rating agency, Moody's Investors Service upgraded the outlook for Indonesia's Ba3 sovereign rating to positive from stable.

The central bank expects 2009 GDP growth at the upper end of 3%-4% forecast range, down from 6.1% recorded in 2008. Inflation is seen below the 5%-7% forecast range by the end of this year.

The International Monetary Fund in June raised its outlook for Indonesia to show a growth of between 3% and 4% this year from 2.5% expansion predicted initially. Inflation is likely to ease to 5% by the end of this year, the lender said.

In the first quarter, Indonesia's GDP grew 4.4%, supported by consumption growth of both households and the government. However, the pace was much slower than the 5.2% witnessed in the final quarter of 2008.

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