S.Korea announces record interest rate cut

SEOUL, Oct 27 - South Korea's central bank on Monday delivered its biggest ever interest rate cut and promised other measures to calm the panic that has been driving down financial markets and rapidly eroding economic growth.

With economic growth at a four-year low and weakening, President Lee Myung-bak told parliament the government would boost spending and cut taxes next year and stood ready to inject liquidity into the system until markets calm.

The Monetary Policy Committee slashed the base rate by 75 basis points to 4.25 percent <KROCRT=ECI> at a rare unscheduled meeting as fears grow that Asia's fourth largest economy is buckling under the strain of the global financial turmoil.

Following is the full text of the Bank of Korea's statement in English, as provided by the central bank:

"The Monetary Policy Committee of the Bank of Korea decided today to lower the Base Rate by 75 basis points from 5.00% to 4.25%."

"The Committee judges that a large cut in the Base Rate is called for in order to guard securely against the possibility of a sharp contraction of real economic activity against the backdrop of the large swings of the exchange rate and stock prices and the partial seizing-up of the credit markets under the impact of the international financial market turmoil on domestic markets."

"Looking ahead, the Committee will do what is needed to ward off the risk of a severe slowdown in economic activity while keeping a vigilant watch on the changes in the upside risk to inflation."