Indonesia's central bank, Bank Indonesia (BI), announced here on Wednesday raising the benchmark interest rate to 6.25 percent with a rise of 25 basis points as the Indonesian rupiah were on a downward trend in recent weeks.

It is the first rate hike since October last year when the central bank raised the rate by 25 basis points to 6 percent.

The decision was made after a two-day policy meeting of the bank's board of governors held on Tuesday and Wednesday.

BI Governor Perry Warjiyo said at a press conference that the rate hike was expected to maintain the stability of the rupiah exchange rate from the impact of worsening global risks.

It is also a pre-emptive and forward-looking step to ensure inflation would remain at the target level of about 2.5 percent in 2024 and 2025 in line with the pro-stability monetary policy stance, he added.