South Korea Is the Latest to Cut Interest Rates HONG KONG - The South Korean central bank surprised analysts on Thursday by trimming interest rates by a quarter of a percentage point - the latest central bank to cut rates in the face of tepid growth. Australia, Europe and India have all lowered borrowing costs this month in a bid to oil the wheels of faltering economic activity. The euro zone is still haunted by its festering debt crisis, while in Asia, the giant Chinese economy is in the midst of a major transition that entails slower growth driven more by domestic demand. In addition, economists have said the constant saber-rattling from North Korea may take a toll on sentiment. In trimming rates to their lowest level since early 2011 - the cut took the base rate to 2.5 percent - the central bank in Seoul joined growth-bolstering efforts by the government, which on Tuesday signed off on plans for billions of dollars" worth of additional stimulus spending to prime the economic pump. The "sluggishness of economic activities in the euro area" has deepened, the Bank of Korea said in a statement accompanying its rate decision, while economic indicators in emerging-market countries like China "have been weaker than initially anticipated." For South Korea, the weakening of the currency in Japan, whose companies are major competitors to South Korean exporters in many areas, adds to the pain of an already tough trade environment. The yen has fallen sharply against major currencies, including the South Korean won, in the wake of efforts by the Japanese government and central bank this year to combat persistent deflation and reinvigorate growth. "The rate cut will lower the funding cost of investment and may revive the prolonged slump of the property and construction sector," Raymond Yeung, an economist at Australia & New Zealand Banking in Hong Kong, wrote in a research note. "As the government is also pushing forward a supplementary budget and other fiscal stimulus packages, today's cut will help accelerate recovery and increase the upside of Korea's" gross domestic product, he added. The central bank last cut rates in October 2012.