Central bank cuts interest rate to record low 2 percent

The Bank of Korea cut its benchmark interest rate to a record low 2 percent from 2.25 percent at its monetary policy meeting on Wednesday. The 2 percent rate matches a record low that had been maintained for 17 months from February 2009 to boost the economy in the aftermath of the global financial crisis.

In a statement announcing the rate cut, the central bank cited risks both at home and abroad. "The euro zone economy continues to be sluggish, while in Korea facilities investment remains weak and economic sentiment has only partially recovered," it explained. This is the second rate cut in three months after the bank lowered it by 25 basis points to 2.25 percent in August to mark the first reduction in 15 months.

The Bank of Korea also revised its GDP growth estimate for this year from 3.8 percent to 3.5 percent. The outlook for 2015 has been trimmed from 4 percent to 3.9 percent, while consumer inflation estimate for this year has been also sharply lowered, from 1.9 percent to 1.4 percent.