South Korea freezes key interest rate for 8th month

Oct. 9 2009

SEOUL - South Korea's central bank Friday froze its key interest rate at a record low 2.0 percent for the eighth straight month to nurture a nascent economic recovery.

At its monthly policy meeting, the Bank of Korea left the benchmark seven-day repo rate for October unchanged.

The bank had cut the rate by a total of 3.25 percentage points between last October and February to try to ease a sharp economic downturn.

The bank said in a statement it expects the domestic economy to maintain its growth trend but cautioned that uncertainties remain.

"In the coming months, the Korean economy is likely to maintain its growth trend (on a quarter-on-quarter basis), helped by the improvement in the world economic environment and rebuilding of inventories, but a number of uncertainties surround the actual pace (of recovery)," it said.

Inflation is likely to remain stable for some time, the bank said, and the country is expected to continue running a current account surplus.

The economy grew faster than expected in the second quarter, with gross domestic product increasing 2.6 percent from three months earlier.