Bank Indonesia (BI) increased the 7-day reverse repurchase rate to 5.75%, as expected by the majority of economists in a Reuters poll.
It also lifted its deposit facility and lending facility by the same amount to 5.00% and 6.50%, respectively.
In total, BI has hiked rates by 225 bps since August. In a statement after the decision, the central bank said that amount of tightening should be "adequate" to bring headline consumer inflation back into its 2-4% target range in the second half of this year.
Asked about the prospect for further rate hikes, Governor Perry Warjiyo indicated an end to the monetary tightening cycle.
"If there is no extraordinary information that we cannot foresee... our use of the word 'adequate' can already answer the question," he told a news conference.
Inflation in Southeast Asia's largest economy hit a 7-year high of 5.95% in September last year amid rising global food and energy prices, but the pace has since slowed to 5.51% in December.
Warjiyo told a news conference that inflation had come down faster than expected.
The rupiah was little changed after the rate decision on Thursday. The currency has strengthened by more than 2% this year amid expectations that the Federal Reserve will slow the pace of U.S. interest rate hikes.
Malaysia's central bank on Thursday unexpectedly kept its benchmark interest rate unchanged, signalling worries about economic growth after four consecutive rate hikes last year. Some analysts said the decision also pointed to an end to its tightening cycle.
(Reporting by Gayatri Suroyo, Fransiska Nangoy and Stefanno Sulaiman; Editing by Ed Davies and Kim Coghill)
