BOK holds key rate steady at 3.25% for June

  The Bank of Korea held off from altering borrowing costs for a 12th straight month as easing inflation gave policy makers room to wait and see how Europe's debt crisis and China's slowdown affect the economy.

    Governor Kim Choong-soo and his board kept the benchmark seven-day repurchase rate unchanged at 3.25 percent as predicted by all 15 economists surveyed by Bloomberg News.

    South Korea has braced for weaker demand for its cars and electronics as European leaders struggle to coordinate a response to turmoil threatening global growth. Finance ministers and central bankers from the world's leading economies agreed this week to cooperate on helping Spain and Greece improve public finances, while China cut borrowing costs for the first time since 2008.

 "Fears of a euro-zone breakup and weak data from China are likely to keep the central bank on the sidelines," Sukhy Ubhi, an economist at Capital Economics Ltd. in London, said before Friday's announcement. "Given that inflation is in retreat and concerns over the global economy are on the rise, we believe the BOK's stance will soon shift towards supporting growth."

    The won was little changed at 1,172.85 per dollar as of 10:15 a.m. in Seoul after touching a two-week high following China's rate action, according to data compiled by Bloomberg. The Kospi index of stocks declined 0.2 percent.

    South Korean officials are trying to sustain growth in Asia's fourth-biggest economy after corporate investment and government spending fueled the fastest expansion in a year in the first quarter. Exports have contracted in all but one month this year, while inflation remained at a 21-month low of 2.5 percent in May.

(Bloomberg)