Indonesia cuts rates for second straight month

Indonesia's central bank Thursday cut its key interest rate for the second straight month to spur growth after Southeast Asia's top economy recorded its slowest expansion in 2015 for six years.

Bank Indonesia slashed the rate by 25 basis points to 7.0 percent. The move followed a cut of the same amount in January, which had been the first reduction for almost a year.

The central bank also cut the reserve requirement ratio by 100 basis points to 6.5 percent and made a small reduction to the rate it pays lenders on overnight deposits, with both moves aimed at encouraging banks to lend more and help lift the economy.

"It is hoped these policies will strengthen efforts to lift economic growth," said bank governor Agus Martowardojo, adding there was more room to loosen monetary policy due to lower inflation.

The latest easing came after official data released earlier this month showed the economy grew 4.79 percent last year, the first time it has fallen below five percent since 2009 at the height of the global financial crisis.

However, expansion accelerated in the final quarter and Bank Indonesia forecast Thursday that growth in 2016 will fall within the range of 5.2 and 5.6 percent.

Indonesia's economy has been losing steam for some time on the back of falling demand for its key commodity exports such as coal and palm oil, particularly from China.

Policymakers had previously been reluctant to cut rates due to high inflation, but slower price increases in recent months have given them space to start tightening monetary policy.

President Joko Widodo has made boosting the country's flagging economy a priority. He has launched a drive to attract much-needed foreign investment, ramped up infrastructure projects and introduced bureaucratic reforms.