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The nation’s annual inflation eased in March to 3.43 percent from 3.81 percent in February as the rice harvest drove down prices for the key staple, the Central Statistics Agency reported on Thursday.

Analysts said the March inflation data makes it more likely that the central bank will keep its key interest rate at 6.5 percent when the board of governors meets to review policy on Tuesday.

The consumer price index slowed on a month-on-month basis, with negative inflation of 0.14 percent in March, compared to 0.3 percent inflation in February and 0.84 inflation in January. March’s data brings year-to-date inflation to 0.99 percent.

Rusman Heriawan, chairman of the agency, also known as the BPS, said the slowing pace of inflation was due to a good harvest for rice.

“The rice price fell by 2.97 percent,” Rusman said. He said the recent appreciation of the rupiah also helped to put a lid on inflation, “as imported inflation did not put pressure on Indonesia’s overall inflation.”

The rupiah strengthened to 9,055 against the dollar on Thursday, up from 9,103 the day before. It has climbed 3.6 percent against the US currency this year.

“The benign March inflation supports no rate change and a dovish Bank Indonesia who, as of last month’s statement, expects no significant inflationary pressure in the first half of this year,” said Johanna Chua, an analyst at Citigroup in Singapore. “As a whole BI appears very reluctant to hike policy rates. Although administered price hikes are back in the picture, with planned electricity tariff hikes of 15 percent in July, BI continued to play down its impact, expecting year-end inflation of 5.7 percent or 5.2 percent, excluding the impact of tariff hikes on consumers.”

The central bank has kept its benchmark interest rate unchanged at 6.5 percent since August.

Other Asia Pacific central banks — in Malaysia, India and Australia — have raised interest rates on fears that inflation may return to a region that is leading the global recovery.

Chua said Citigroup maintained its forecast that Bank Indonesia will hike its main interest rate by 75 basis points this year.

Enrico Tanuwidjaja and Thomas Lam, economists at DMG & Partners Securities in Singapore, said in a research note that inflationary pressures are likely to increase in the second half of the year.

“We believe that inflationary pressures will be mild in the first half of 2010 [our forecast at 4.42 percent] but are likely to build up in the second half [forecast 6.13 percent] on the likelihood of fuel, electricity, and possibly gas tariff hikes,” they wrote. “Perhaps, a potential rebound in oil and commodity prices could render an upside risk for inflation .”