Indonesia cuts interest rate for first time in nearly a year

Indonesia's central bank cut its key interest rate Thursday for the first time in nearly a year, in a bid to boost lagging growth in Southeast Asia's largest economy.

Bank Indonesia cut the rate by 25 basis points to 7.25 percent. The rate had remained unchanged since February 2015.

The announcement came just hours after gunfire and bombs rocked central Jakarta, killing seven -- five attackers and two civilians -- though analysts didn't draw any link between the two events.

The central bank had been reluctant to cut rates due to the weaker rupiah and fears over the fallout of a US Federal Reserve rate hike.

This cut was expected by analysts, who pointed to low inflation as one factor behind the decision.

However it is not clear if the move will be enough to revive economic growth in Indonesia, which hit six-year lows during 2015, with some analysts predicting at least another rate rise this year.

"Even so, prospects for Indonesia’s economy are far from bright," Capital Economics said in a statement, adding low commodity prices would continue to weigh heavily on growth in 2016.

Indonesia had enjoyed above five percent growth in recent years with the exception of 2009 due to a global slowdown.

But despite a slight comeback in the third quarter, full-year growth is expected to be the weakest for the first time since the global financial crisis.