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SEOUL: South Korea's central bank Thursday froze the key interest rate at a record low 2 per cent for a 13th month amid uncertainty about the economy at home and abroad.
The Bank of Korea left the benchmark seven-day repo rate unchanged after the final rate-setting meeting under governor Lee Seong-Tae, whose four-year term ends this month.
The bank, which is independent of politicians, had nevertheless come under pressure to keep the rate unchanged.
Finance Minister Yoon Jeung-Hyun said Monday it was not the right time for an increase. "The private sector is not riding on a full-scale recovery and conditions in the job market are serious," he said.
"Economic uncertainty at home and abroad warrant a rate freeze over an extended period of time," Lee Sung-Kwon, chief economist at Shinhan Investment Corp, told Yonhap news agency after the rate was kept unchanged.
"Euro-zone budget deficit woes, along with potential tighter bank rules in the US and China's tightening stance, are amplifying economic risks."
South Korea, Asia's fourth largest economy, recovered from its recession faster than expected last year, partly thanks to aggressive government stimulus measures, but recent data show the momentum may slow.
South Korea grew 0.2 per cent quarter-on-quarter in the three months to December 2009, down from a 3.2 per cent gain in the previous quarter.
A key indicator of the country's future economic outlook declined for the first time in 13 months in January, when the country's jobless rate jumped to five per cent the highest since in March 2001.
- AFP/sc
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