Bank Indonesia lowered its benchmark rate by a quarter point to 6.5% on Wednesday on signs inflation would continue to fall.
The central bank said inflation would continue to decline as domestic demand was anaemic and inflation expectations had also fallen.
Inflation fell to 2.71% in the year to July - a nine-year low.
The central bank has now cut rates for nine straight months. However, it indicated that Wednesday's cut may be the final one of this year, warning that inflationary pressures were