SEOUL, South Korea (AP) — South Korea's central bank has unexpectedly lowered its key interest rate after keeping the policy rates unchanged for more than a year.
The Bank of Korea said Thursday that its policymakers cut the benchmark seven-day repurchase rate by a quarter of a percentage point to 3 percent.
The surprise decision highlights growing external threats to Asia's fourth-largest economy and the need to stimulate domestic demand amid Europe's persisting debt woes. South Korea's government cut the country's 2012 growth outlook to 3.3 percent from 3.7 percent last month.
The rate cut is South Korea's first since February 2009 when the central bank lowered its policy rate by 50 basis points to 2 percent. The bank raised key interest rates in five steps between July 2010 and June 2011 to 3.25 percent.