Bank of Korea holds interest rates steady as expected

SEOUL: South Korea's central bank on Thursday left its policy interest rate unchanged as expected, to assess the effect of recent raises and as the outlook for economic growth grew more uncertain while inflation stayed high.

The Bank of Korea's monetary policy committee kept the 7-day repurchase agreement rate at 3.25 percent, a media official at the central bank announced without elaborating.

Governor Kim Choong-soo is expected to hold a news conference from 11:20 am (0220 GMT) to explain the six-member committee's decision and the central bank's policy direction.

Twenty-one of the 23 analysts surveyed by Reuters predicted no change in the policy rate, although a majority still saw two more raises of 25 basis points each by the end of the year.

The Bank of Korea cut the policy rate by 325 basis points to a record-low 2 percent between late 2008 and early 2009 and started to raise it in July last year.

Thursday's decision came as the euro zone's debt crisis and slowing US economy clouded the outlook for South Korea's exports-driven economy at a time when domestic demand remains in slump and inflation shows no sign of easing.

Copyright Reuters, 2011