Indonesia Raises Benchmark Interest Rate to Highest Level in Four Years

Preparing for the Fed to roll back its bond-buying program

JAKARTA—Indonesia's central bank raised its benchmark interest rate Tuesday to its highest level in four years, trying to shield the economy from expected market turbulence when the U.S. Federal Reserve begins to wind back its easy monetary policies.

Bank Indonesia's decision to raise its benchmark lending rate by 0.25 percentage point to 7.5% surprised most economists, who had expected authorities to keep rates on hold.