South Korea's central bank cut its main interest rate by 25 basis points today, joining a round of worldwide rate cuts aimed at tackling global financial market turmoil.
The Bank of Korea lowered its base rate to 5.00 per cent from a near eight-year high of 5.25 per cent set in August, when the central bank was guarding against mounting inflation expectations.
It was the bank's first cut since late 2004 and the first reduction cut after a string of eight increases.
Following the decision by the central bank's monetary policy committee the bank issued a statement saying the country's economic slowdown was now more visible and that it expected inflation to stay above target for a considerable period.
Seoul shares pushed ahead after the announcement while the won, which had hit a 10-year low in morning trading, recovered some of its early losses.
The decision comes after US, European and Chinese central banks slashed their interest rates by up to 50 basis points yesterday in concert, aiming to halt a downward spiral in markets as the world grapples with its worst financial crisis in decades.