BOK freezes key rate at 1.75% for April

In a statement, the BOK expected exports to rebound in the second half of this year, while private consumption is likely to gain recovery momentum.

"The pace of domestic economic growth has moderated somewhat as consumption growth has temporarily slowed, facilities and construction investment have continued undergoing adjustments and export growth has continued to slow," the BOK said.

"Going forward, the board expects that consumption will continue to grow, while exports and facilities investment will also recover gradually toward the second half of this year, although the adjustment in construction investment will continue," it said.

South Korea's gross domestic product "is forecast to grow at the mid-2 percent level this year, slightly below the level projected in January," when the BOK expected the economy to grow 2.6 percent this year.

Exports fell for the fourth straight month in March. Outbound shipments came to US$47.1 billion for March, down from the $51.3 billion a year earlier, according to government data.

Analysts had largely expected the BOK to leave the rate steady at this month's policy meeting, even though inflation appeared to be kept in check.

South Korea's consumer prices rose at the slowest pace in nearly 20 years last month.

The consumer price index rose 0.4 percent in March from a year earlier, marking the third straight month that the consumer price index has been below 1 percent, according to the data compiled by Statistics Korea.

The March figure marks the lowest increase since July 1999, when the country's consumer prices rose 0.3 percent, the statistical office said.

Last month, the International Monetary Fund said South Korea is facing short- and medium-term headwinds to growth, which requires policy action.

"The Bank of Korea should have a clearly accommodative monetary policy stance, and the authorities should maintain appropriately tight macroprudential policies to preserve financial sector resilience," the IMF said. (Yonhap)