In surprise move, South Korea's central bank lowers interest rate for first time in 3 years

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SEOUL, South Korea – South Korea's central bank on Thursday cut its policy rate for the first time in three years to combat the economy that faces further risks from a heated trade dispute with Japan.

The Bank of Korea lowered the key interest rate by 1.50% following a meeting of its monetary policy committee, this year from 2.5% to just above 2%.

The bank has slowed exports and domestic investment as well as volatility in financial markets caused by the ongoing U.S.-China trade dispute and Japanese curbs on certain technology exports to South Korea. The bank had hiked the rate by 0.25% in November and last lowered borrowing costs in June 2016.

The bank said it will "carefully monitor developments such as the US-China trade disputes, Japan's export restrictions, monetary and economic policies of major countries and geopolitical risks, while examining their effects on domestic growth and inflation. "

The move comes amidst escalating row between South Korea and Japan over Tokyo.

South Korea says the Japanese trade curbs could hurt its export-dependent economy and disrupt global supply chains, and plans to file a complaint with the World Trade Organization.

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