S. Korea cuts interest rate for second time in three months to help struggling economy

A man talks on a mobile phone in an alleyway in Seoul. South Korea's central bank has cut its benchmark interest rate to the lowest level since 2010. -- PHOTO: AFP 
A man talks on a mobile phone in an alleyway in Seoul. South Korea's central bank has cut its benchmark interest rate to the lowest level since 2010. -- PHOTO: AFP 

SEOUL (AFP) - South Korea's central bank cut interest rates for the second time in three months on Wednesday, in a further effort to boost an economy struggling with weakening demand at home and abroad.

The Bank of Korea (BOK), which has come under government pressure to help inject some pace into the country's slow economic recovery, cut its benchmark rate by 25 basis points to 2.0 per cent.

It followed a similar cut in August that ended a 15-month interest rate freeze.

The 2.0 per cent rate matches a record low last seen from February 2009 through June 2010 when Asia's fourth-largest economy was seeking to recover from the global financial crisis.

The latest cut came before the BOK was due to announce its economic outlook, which analysts expect will see a downward revision of its growth forecast for 2014.

South Korea unveiled a 41 trillion won (S$50 billion) stimulus package in July when Finance Minister Choi Kyung-Hwan warned of a risk of recession after the economy grew at its slowest rate for more than a year in the second quarter.