SEOUL: South Korea's central bank on Friday held its key interest rate for a 10th straight month amid lingering concerns about inflation and slow economic recovery.
The Bank of Korea Governor Kim Choong-Soo said its Monetary Policy Committee unanimously decided to hold the benchmark seven-day repo rate at 3.25 percent for April.
South Korea's consumer inflation fell to a 20-month low of 2.6 percent in March.
But inflation expectation a key gauge for rate policy decisions has hovered around the upper limit of the bank's two to four percent target range over the past year.
"The inflation expectation that has been remaining high and geographical risks in the Middle East as well as European debt woes still remain as risk factors," the central bank said in a statement.
South Korea, the world's fifth-largest oil importer, buys large parts of its oil supply from the Middle East.
The price of Dubai crude has risen above $120 per barrel, posing high risks to South Korean businesses and economic growth, Kim told reporters.
The botched rocket launch by North Korea on Friday appears to have "little impact" on Seoul's financial markets, he said, but added the bank was watching the markets closely for any potential setbacks.
South Korean stocks rose 1.03 percent on Friday despite the launch that sparked international alarm. The benchmark KOSPI gained 20.54 points to 2,007.17 shortly after noon.
The Korean won also gained, rising to 1,132.55 against the dollar, from 1,140.60 late Thursday.
Pyongyang, ignoring widespread international condemnation, launched what it claimed was a satellite-carrying rocket but minutes later it exploded mid-air.
Seoul and Washington said the rocket launch was a disguised long-range missile test.
Many analysts have predicted the BOK to keep the key rate unchanged this year as the country's export-driven economy remains vulnerable to downturns in its major export markets including the EU.
South Korea's exports unexpectedly fell 1.4 percent to $47.36 billion in March from a year earlier.
Its trade surplus fell in March from a year earlier due to a sharp drop in debt-hit Europe and slowing sales to China, the South's biggest trading partner.
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