The Bank of Korea(BOK) cut its benchmark interest rate Friday, marking its first pivot from a yearslong monetary tightening mode.

After the BOK’s Monetary Policy Board held a rate-setting session Friday, the central bank announced it will lower its key lending rate by zero-point-25 percentage point to three-point-25 percent. 

This is the first time the BOK has departed from its monetary tightening policy in over three years, since it started raising rates in August 2021. 

The cut comes amid a slow economic recovery and sluggish domestic demand, with the economy contracting zero-point-two percent on-quarter in the April-June period and domestic consumption decreasing zero-point-two percent in the same period. 

Inflation, however, slowed to one-point-six percent in September, hitting its lowest point in over three years. 

The BOK’s move comes after a recent decision by the U.S. Federal Reserve to lower its key interest rate for the first time in more than four years, cutting it by zero-point-five percentage point to the range of four-point-75 percent to five percent.

With the BOK’s rate cut, the gap between its rate and the Fed’s widened to one-point-75 percentage points.