The Bank of Korea cut its benchmark interest rate by 25 basis points to one-point-25 percent on Wednesday.

The central bank had been widely expected to lower the rate to bolster a slowdown in the economy due to external uncertainties such as the U.S.-China trade war.

A decline in consumer prices has also fueled concerns of deflation. 

It is the bank's second rate cut this year since a 25 basis point reduction in July.