South Korea's central bank slashes key interest rate to 4.25 percent from 5 percent

South Korea's central bank has slashed its key interest rate in a bid to boost the economy and stock market amid the global financial crisis, AP reported.

The Bank of Korea said it lowered its benchmark seven-day repurchase rate from 5 percent to 4.25 percent at a special meeting Monday. Spokesman Kim Seong said it was the largest-ever cut under the central bank's current policy set-up.

The decision came as South Korean markets suffer due to the world financial turmoil. The country's benchmark stock index lost one-fifth of its value last week, its worst weekly performance on record.

Separately, South Korean President Lee Myung-bak told the National Assembly on Monday that his government would increase public spending and reduce taxes to boost the economy.