BOK freezes key rate for 11th month in May

South Korea's central bank on Thursday left the key interest rate unchanged for the 11th straight month in May, as persistent European debt concerns and the weak pace of domestic economic growth challenge policymakers. 

Bank of Korea Gov. Kim Choong-soo and his fellow policymakers froze the benchmark 7-day repo rate at 3.25 percent for this month, as widely expected. 

The decision was in line with the forecast of analysts polled by Yonhap Infomax, the financial news arm of Yonhap News Agency.

The BOK cut the benchmark rate by 3.25 percentage points to a record low of 2 percent between October 2008 and February 2009 in the wake of the global financial crisis. Since July 2010, it has raised borrowing costs by 1.25 percentage points in five steps to curb inflation.

"There were some concerns about lingering inflation pressures, but this was overshadowed by worries surrounding fiscal debt issues facing some eurozone countries and fallouts this could have on the global economy and South Korea's growth," a BOK source said.

The central bank predicted earlier that Asia's fourth-largest economy will grow 3.5 percent this year, down from 3.6 percent in 2011.

(Yonhap News)