Bank Indonesia cuts rate to 8.75%

Bank Indonesia surprised the market Wednesday by cutting its benchmark rate by half a percentage point to 8.75%, and signaled easier policy settings in the months ahead. Analysts and markers cheered the lowering of the benchmark on expectations that lower interest rates would cap bad loans at a time when the economy is slowing. The central bank also said it expected the economy to grow between 4% and 5% this year, compared with forecast growth of 6% for 2008. Source: PA Asia - Public Affairs and CSR from The Wall Street Journal, 8 January