The Bank of Korea (BOK) cut down on its key interest rate to a record low of 2 percent on Thursday and signed at further cuts.

The BOK, in its monthly policy meeting, decided to lower the benchmark interest rate by 0.5 percentage point to 2 percent. It is the sixth interest rate cut since October last year, with the total rate cuts amounting to 3.25 percentage points.

The BOK also cut its low-rate loans to commercial lenders by a quarter percentage point to 1.25 percent.

"The economy is shrinking down at a faster pace than expected and shows several signs of marking negative growth this year," BOK Governor Lee Seong-tae told the press.

"Additional rate cuts are possible, but the central bank will adjust their pace after monitoring the financial market closely," Lee said.

The interest rate cut was announced two days after Finance Minister Yoon Jeung-hyun's 2-percent contraction forecast on the South Korea's economy.

Major think tanks and investment banks, along with the International Monetary Fund, also predicted that the country's economy is highly likely to show negative growth this year.

The South Korean government is now striving to stimulate the slowing-down economy by carrying out tax cuts and expanded spending, with Finance Minister Yoon promising a supplementary budget and large job creation.

Experts expected that the BOK's monetary easing policies will be continued. However, further cuts in the interest rate are carefully contemplated at the moment, as continuous large reductions may place the BOK without many options to deal with economic slow down, according to South Korea's Yonhap News Agency.