South Korea’s central bank cut rates by 25 basis points Tuesday to their lowest since August 2022, as it strives to stimulate a slowing economy.

The Bank of Korea reduced rates to 2.75% from 3%, in line with expectations from economists, trimming them for the third time in four meetings.

The central bank said the decision was taken to mitigate downward pressure on the economy, forecasting growth to “decline significantly.”

The BOK cut its 2025 growth outlook to 1.5% from its 1.9% forecast in November, saying that domestic demand recovery and export growth are likely to be lower than expected due to deteriorating economic sentiment and U.S. tariff policies.

It acknowledged that concerns about foreign exchange markets still remain, but added inflation had stabilized while household debt growth had slowed.

The BOK maintained its 1.9% inflation forecast for 2025, while the core inflation outlook was lowered to 1.8% from 1.9% in November.

The decision comes as South Korea continues to grapple with political uncertainty over.

South Korea’s GDP growth in the fourth quarter missed expectations, clocking its slowest expansion in six quarters at 1.2%, according to advance estimates. The BOK attributed the slowdown to weakness in consumption and construction sectors.

The widening of the rate spread between the U.S. dollar and South Korean won has not seen a meaningful bond capital outflow, Citi said in a note earlier this month, which sees a “limited negative impact” of weakness in the South Korean won on the country’s financial industry and foreign capital flows.