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In a surprise move on Thursday, the Bank of Korea decided to slash its key interest rate by 0.25 percentage point.
This is the first rate cut since November 2004 and it brings the key interest rate down to 5 percent.
Observers say the rate cut aims to ease the interest burden on businesses and halt the economic slowdown by stimulating domestic demand.
A welcome drop in global oil prices also played a key role in the decision.
The BOK raised the rate by a quarter percentage point back in August in an effort to ease inflationary pressure but the central bank had kept the rate steady until now.
Arirang News
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