The Bank of Korea (BOK) may further cut its policy rate to help minimize the economic fallout from the new coronavirus pandemic, BOK minutes showed Tuesday.

The central bank delivered a surprise rate cut in an emergency meeting of its monetary policy board held March 16, slashing the policy rate by a half percentage point to a new record low of 0.75 percent.

"A rate cut itself may not be expected to promote consumption and investment by easing travel restrictions, but it is expected to help buffer the shock from a sharp drop in economic conditions by limiting the spread of market uncertainties and easing the interest burden on households and companies," a board member was quoted as saying in the BOK's first emergency meeting in over a decade.

"In addition, I believe it would be desirable to maintain a flexible monetary policy in times of crisis, such as this," the board member added.

The BOK's emergency rate cut came one day after the United States Federal Reserve delivered its second emergency rate reduction in two weeks, sending its base interest rate to a target range of zero percent and 0.25 percent.

Still, the BOK's rate reduction had been widely unexpected, as the central bank had voted to keep the rate steady at its previous rate-setting meeting held on Feb. 27.

In the March 16 meeting, a second board member noted the continued spread of COVID-19 since the February meeting was beginning to have a direct impact on the real economy.

"The recent conditions in the real economy and the financial market showed that problems stemming from the COVID-19 outbreak are spreading to the entire economy from areas directly exposed to the outbreak," the board member said, according to the BOK minutes.

Another member said the fallout from the coronavirus outbreak was now expected to be bigger and to last longer than earlier anticipated.

"Also, the problem has become a global shock, instead of a regional issue, as (COVID-19) is beginning to spread in the United States and EU, the axis of global economy and finance," the BOK member said.

"We now face a situation where we must prepare for large declines in our economic growth and inflation this year, as well as a rise in liquidity risks in the short term. (The BOK) needs to take bold monetary policy steps that will do more than just provide liquidity to vulnerable sectors," the member added.

The BOK has slashed its 2020 growth outlook for the local economy to 2.1 percent from the previous 2.3 percent.

BOK Gov. Lee Ju-yeol, however, has noted the country's economic growth will likely fall short of the 2.1 percent estimate and strongly hinted at negative growth at least in the first quarter.

The BOK is set to hold another rate-setting meeting on April 9. (Yonhap)