Indonesia's central bank increased interest rates by more than expected on Thursday as it sought to keep a lid on inflation after the government raised fuel prices earlier this month.

Bank Indonesia (BI) raised the 7-day reverse repurchase rate by 25 basis points to 4.25%, as widely expected. Out of 30 economists polled by Reuters, 27 had expected such a move, while the remaining three had bet on a bigger 50 bp rate hike.

The bank also hiked the overnight deposit facility and lending facility rates by the same amount to 3.50% and 5.00%, respectively. (Reporting by Gayatri Suroyo, Fransiska Nangoy and Stefanno Sulaiman; Editing by Ana Nicolaci da Costa, Ed Davies)