Indonesia’s central bank lowered interest rates by 25 basis points to 7.25 percent on Thursday in hopes that it would spur spending and growth.

The announcement of the first rate cut by the Bank of Indonesia in 11 months comes while the country’s capital Jakarta is rocked by several explosions and gun-battles.

Seven people, including three policemen, were killed after seven blasts struck downtown Jakarta on Thursday, including a Starbucks café popular with expats.

RELATED: Multiple bomb blasts, shootings hit Jakarta - at least 6 dead

The terror attacks have worsened global confidence and exacerbated financial market turmoil.

According to Bloomberg, Bank Indonesia (BI) has faced political pressure to boost sluggish economic growth while struggling with a falling Rupiah.

The rupiah saw a 10 percent depreciation in 2015, triggered by Yuan depreciation, concerns over Greece’s fiscal negotiations and uncertainties in the Federal Funds Rate hike, and since the New Year has experienced a further 0.7 percent fall.

In December 2015, BI kept rates on hold at 7.5 percent, noting in a statement that:

“In the short term, Bank Indonesia will monitor global financial market development post-Federal Funds Rate (FFR) hike as well as conditions of the domestic economy.

"Additionally, Bank Indonesia will strengthen coordination with the Government to control inflation, stimulate growth and accelerate structural reforms, thereby buoying economic growth while maintaining macroeconomic and financial system stability."

In 2015, Indonesian President Joko Widodo announced a range of reform policies targeted at creating a healthy breeding ground for growth. This includes packages designed to attract investment and fiscal stimuli, predominantly in the form of infrastructure projects.