JAKARTA - INDONESIA'S central bank cut its benchmark interest rate by 25 basis points to 6.75 per cent on Friday in a bid to stimulate the economy as inflationary pressures ease.

The cut was expected after the annual inflation rate dropped to 3.65 per cent from 6.04 per cent in May.

Bank Indonesia said the economy would grow 3.0 to 4.0 percent this year, compared with 6.1 per cent in 2008.

Annual core inflation, which excludes food items and government-set prices, eased to 5.56 per cent from 6.64 per cent in May.

Bank Indonesia has cut its policy rate by 275 basis points since December.

Indonesia is one of the best performing economies in the G-20 thanks to robust domestic demand. -- AFP