SEOUL - SOUTH Korea's central bank cut its key interest rate on Friday for the fifth time in just three months to help boost the country's slowing economy.

The Bank of Korea said it lowered the benchmark seven-day repurchase rate to 2.5 per cent from an already record low 3 per cent at a regular policy meeting Friday.

The central bank has joined others worldwide in slashing rates to battle the global financial crisis. The Bank of England on Thursday cut rates to 1.5 per cent - the lowest level in its 315-year history.

South Korea's export-driven economy has been hit hard by declines in global consumer demand, with industrial production and exports falling sharply.

Output plunged 14.1 per cent in November from the same month the year before, government data show. Exports fell 17.4 per cent in December, following a drop of 18.3 per cent in November.

The Bank of Korea said last month that the economy will probably manage growth of just 2 per cent this year from an estimated 3.7 per cent in 2008. South Korea, Asia's fourth-largest economy, grew 5 per cent in 2007.

Some economists, however, say South Korea is facing the possibility this year of suffering its first contraction on an annual basis since 1997, when it was in the throes of the Asian economic crisis.

Friday's cut marked the fifth time the Bank of Korea has slashed the benchmark rate since Oct 9. A full percentage point reduction last month was its biggest ever.

South Korea's benchmark stock index was lower in morning trading after the decision, falling 1.8 per cent to 1,184.11.

The South Korean won traded lower against the US dollar, falling 0.9 per cent to 1,334.25.

South Korea's rate still remains above those of some major central banks.

The US Federal Reserve's key rate is at a record low, in a range of zero to 0.25 per cent. The Bank of Japan's benchmark rate is at 0.1 per cent. -- AP