South Korea's central bank cut its benchmark rate by 25 basis points to an all-time low of 1.75 percent Thursday, joining the growing list of central banks to cut rates.
It was the first time the country's policy rate fell below 2 percent. The unexpected rate cut came after weak economic data of the first two months of the year stirring up deflation worries.
The country's consumer price inflation was at 0.5 percent in February, from a year earlier, and it was the third month it stayed below 1 percent.
It actually would have posted a negative number if it were not for a hike in tobacco prices. Experts saw it as an early sign of deflation, further increasing market expectation for a rate cut.