Anchor: The Bank of Korea surprised markets by lowering the key interest rate to a record low one-point-25 percent on Thursday. The central bank appears to have moved preemptively before full-fledged restructuring begins in the financially-troubled shipbuilding industry, which will lead to a massive loss of jobs.
Our Kim In-kyung has more.

Report: South Korea's central bank has lowered the nation’s key interest rate by 25 basis points in a surprise move.

In its monthly monetary policy meeting on Thursday, the Bank of Korea(BOK) decided to cut the rate to a record low one-point-25 percent.

It marks the first rate cut in a year after the BOK lowered the rate to one-point-five percent last June.

The BOK was widely expected to stand pat on the interest rate, but a weak economy and anticipations for a delayed U.S. rate hike appear to have pushed the bank to slash rates.

Following the unanimous decision, BOK Governor Lee Ju-yeol told reporters that the South Korean economy faces greater downside risks, citing the current corporate restructuring for shipping and shipbuilding companies.

The South Korean shipbuilding industry is mired in serious financial woes due to a slump and oversupply in the global market. The restructuring in the core industrial sector is expected to lead to big job losses and fan a decline in the already weak economy.

According to the government's restructuring plans unveiled Wednesday, shipbuilding firms are expected to downsize their workforce by about 30 percent and production facilities by 20 percent by 2018.

The monetary policy committee also appears to have taken into consideration disappointing job market data in the U.S., which has made it unlikely that the Fed will hike rates this month. There have been concerns that if South Korea lowers rates while the U.S. increases, it may lead to a quick outflow of foreign funds.

The government welcomed the decision to slash the rate, expressing hope that it would revitalize the economy.
Kim In-kyung, KBS World Radio News.