The Bank of Korea (BOK) cut interest rates for the first time in 15 months on Thursday, in a decision that was widely expected.
The central bank lowered its base rate by 25 basis points to 2.25 percent. Governor Lee Ju-yeol is due to hold a news conference at 11:20am local time.
Markets showed a limited response to the news. The won was up 0.1 against the dollar at 1,027.6 as of 0117 GMT. The Kospi Composite rose 0.4 percent.
Analysts say the move is a sign the BOK is caving in to government pressure. Newly-appointed Finance Minister Choi Kyung-hwan has been pushing for looser monetary policy since the government unleashed a series of stimulus measures last month to support faltering growth.
"I think the move really reflects policy coordination between officials. What we're seeing is the government delivering stimulus late last month and now the BOK is contributing to the mix. We think this will help sustain an acceleration in growth and we think the GDP (gross domestic product) will rise at a faster rate of 3.4 percent this year," said Ronald Man, Asia Pacific economist at HSBC.
South Korea - Asia's fourth-largest economy - has been grappling with massive household debt levels and a weak property market.