JAKARTA, Sept. 22 (Xinhua) -- Indonesia announced on Thursday to raise its benchmark banking interest rate by 50 bps to 4.25 percent to suppress inflation amid the impact of rising fuel prices and uncertainty in global financial markets.

The decision was made in a two-day meeting of the Board of Governors of Bank Indonesia, which also decided to increase the deposit and lending facility rates by 50 bps to 3.50 percent and 5.00 percent, respectively.

"This decision to raise the policy rate was taken as a front-loaded, pre-emptive, and forward-looking measure to lower inflation expectations and return core inflation to the 3.0 +/- 1% target corridor in the latter half of 2023," said Governor of Bank Indonesia Perry Warjiyo in a virtual press conference.

The rising inflationary pressure was driven by the persistently high global energy and food costs, as well as the impact of domestic fuel price adjustments, Warjiyo added.

Bank Indonesia projects the country's economy to grow in the range of 4.5 to 5.3 percent, and inflation will exceed the upper limit of 4 percent by the end of 2022.